Commercial property decisions benefit from careful questions and sound advice. This guide outlines practical considerations for buyers in Victoria, without assuming that any one property or strategy suits everyone.
The lease is part of what you are buying
When purchasing a tenanted commercial property, the lease can materially affect income, obligations and future flexibility. Buyers should obtain and review the executed documents and any amendments, not just the agent’s leasing summary.
Who is the tenant and what is the term?
Confirm the correct tenant entity, commencement and expiry dates, renewal options and any rights to terminate. Understand whether the lease is registered or otherwise protected and seek legal advice on the implications.
How is rent calculated and reviewed?
Check current rent, review dates, review methods, incentives, abatements and any outstanding adjustments. Distinguish face rent from effective income where incentives apply. An advertised rental figure may not capture the full arrangement.
Which outgoings can be recovered?
Review the lease and relevant legislation to understand which expenses the tenant pays and which remain with the landlord. Do not assume every cost described as an outgoing can lawfully be passed through.
Who maintains and repairs the property?
Clarify responsibilities for structure, roof, services, essential safety measures, fixtures and fitout. Repairs, capital works and compliance responsibilities can have a substantial effect on ownership costs.
What security and guarantees are in place?
Ask about bonds, bank guarantees, personal or corporate guarantees and their transfer or replacement on sale. Your lawyer should review whether the security is valid, sufficient and properly documented.
Could retail leasing rules apply?
Some Victorian premises may fall under retail leasing legislation, depending on the circumstances. That can affect disclosure, outgoings and other obligations. Ask a Victorian commercial property lawyer to determine the correct legal framework rather than relying on the property label alone.
What happens on settlement and afterwards?
Confirm rent adjustments, tenant notices, assignment of landlord interests, records, keys, securities and ongoing management arrangements. Ensure the contract and settlement process address these matters with your solicitor. Lease review also sits inside due diligence and our process.
Making a considered decision
A lease can be a valuable feature of a commercial investment, but only when its terms, tenant and obligations have been properly understood.
Considering a commercial property purchase in Victoria? VEN Commercial provides independent, full-service buyer representation, from property search through to settlement coordination. Contact us to discuss your objectives, see our services, or return to Commercial Property Insights.
General information only. This article is not legal, financial, tax, planning, engineering or investment advice. Seek qualified advice specific to the property and your circumstances.
