Commercial leases are legally binding agreements between a property owner and a party that has agreed to occupy the property. The property owner, known as the landlord or lessor, holds a number of obligations to the occupier of the property, known as the tenant or lessee. Of those obligations, it is particularly important that commercial landlords understand their responsibilities surrounding the safety of their premises for their tenants and others.
A first point of call for obligations relating to commercial leasing agreements should always be the terms of the lease itself. Importantly, the lease will specify what purpose the premises may be used for, as well as what activities are prohibited on the premises. By doing this, a landlord can ensure that the tenant is only undertaking activities that are safe to carry out in the relevant space. Further, the provisions of the lease can determine who holds responsibilities relating to certain safety aspects of the property, as well as for maintenance and repair. This may be particularly relevant for large commercial spaces with more than one tenant, such as office buildings, which will often involve common areas and facilities. If landlords are unsure of their safety obligations, they should always refer to the terms of the lease, and where necessary, they should seek appropriate legal advice regarding those terms.
While the lease should be a first point of reference for commercial landlords, numerous safety obligations also arise under legislation. In the ACT, it is important that landlords refer to and understand their obligations under the Work Health and Safety Act 2011 (the Act). The Act seeks to implement a nationally consistent framework, with obligations to secure the health and safety of workers and workplaces, whilst also imposing significant penalties for breaches of those obligations. The provisions of the Actapply to any person conducting a business or undertaking, which would include a landlord’s business of supplying commercial premises. The Act is wide ranging, but of particular importance to commercial landlords are the following duties:
Issues that may be important for a landlord to consider in ensuring compliance with the above include, but are not limited to, the structural integrity of the property; the safety of any common areas and facilities; access; fire safety; asbestos and other hazardous materials; lighting; security; and air quality.
Landlords who fail to comply with their safety obligations under the Act are subject to serious penalties, which could affect both companies and individuals personally. It is also important to note that landlords cannot contract out of the obligations imposed under the Act, either through the terms of the lease or otherwise.
Property Maintenance
A landlord should always ensure that their buildings are in a safe condition, including assessing structural aspects of the property, any fixtures and facilities in common areas, as well as other areas that are currently untenanted. Whilst the terms of the lease will usually specify who is responsible for maintenance of the different areas of a property, and often impose significant obligations on tenants, landlords should still carry out regular inspections of their properties to ensure there are no safety risks to tenants and others. It is also important for landlords to oversee any of their cleaning, maintenance or other staff, both to confirm they are properly preforming their duties, but also to ensure the health and safety of those staff.
Fire Safety
One of the most significant risks commercial landlords face is the possibility of fire. Landlords should establish and provide to their tenants a fire safety plan setting out procedures in the instance of a fire, including where fire exits are located and gathering places outside of the building. Furthermore, landlords should ensure that fire equipment is readily available and accessible to their tenants; should provide necessary training for tenants relating to fire procedures, including establishing fire wardens; and should undertake drills and training programs relating to fire safety in their building.
Insurance
A final point for commercial landlords to consider is insurance cover. The lease will ordinarily require that a tenant take out insurance policies approved by the landlord and noting the landlord’s interest, including public liability cover. A landlord should also maintain its own insurance policies in relation to the building structure and common areas of the property. While insurance cover does not actually provide physical safety for tenants or the property itself, it can ensure that the landlord and the property are protected from a financial perspective, should something unexpected occur.
If you have any questions in relation to this article, please do not hesitate to contact the BAL Lawyers Property team on 02 6274 0999.