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ARTICLE · 14 JULY 2012

Landlord liable for putting lease premises 'in a state of utter devastation'

Cooper Grace Ward
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Arrangements with the changeover of tenants must be completely finalised and documented before any work is performed.

AustraliaReal Estate and Construction
Rocco Russo
Rocco Russo
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When a commercial tenant moves out, it is not uncommon for the landlord and tenant to come to an arrangement about the outgoing tenant's make-good obligations that takes account of the incoming tenant's fit-out requirements. For example, the parties will often agree that, instead of restoring the premises to their original condition, the outgoing tenant can simply make a financial contribution to the incoming tenant's fit-out.

The case of Pourzand v Telstra Corporation Ltd [2012] WASC 210 shows the severe consequences for landlords if those arrangements are not finalised before work starts.

Background

The tenant's lease was due to expire at the end of March 2010 and the tenant had effectively moved out of the premises by June 2009. In early September 2009, with around seven months left on the lease, the tenant was considering an arrangement with the landlord where the tenant would pay out the remainder of their lease term and a sum of money to represent their

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