Henry and Kylie run a small company which owns commercial rental properties. Part of their property portfolio includes a block of shops which they lease to small businesses. Recently one of their long-term tenants moved out and Kylie was happy to have quickly found a new tenant who wanted to move in to start a small cake shop.  Henry and Kylie had the new tenant sign an agreement to lease the empty shop and two car parks.

Not long after the cake shop opened, the new tenant complained to Kylie that the neighbouring gift shop owner was using the two car parks they leased.  The new tenant was adamant that the two car parks directly outside their shop should be for their exclusive use.  When Kylie spoke to the gift shop owner, they said that the car parks outside the cake shop were included in their lease and should not be being used by the cake shop.  A major conflict then arose between all Henry and Kylie's tenants in the block of shops because they were all claiming specific car parks were for their use only.  The cake shop was now threatening to move out and had stopped paying their rent until Henry and Kylie let them use the car parks directly outside their shop.

Henry and Kylie were confused and unsure what to do so they contacted their solicitor for some advice.  The solicitor found an issue because the lease to the cake shop did not include any premises plans outlining the car parks or any description of which two car parks were being leased with the shop. It was also unclear which car parks were being leased to the gift shop.  Henry and Kylie had not wanted to go to the expense of having their solicitor review the agreements to lease, or a surveyor prepare plans, because they were just leasing small shops and they could not see the point.

Henry and Kylie now have very unhappy tenants and unclear lease provisions causing an unfortunate car park dispute.  It is likely an arbitrator will need to be engaged by the parties to resolve the dispute which could be costly and time consuming for all parties involved.

This scenario outlines why it is important to seek legal advice before signing an agreement to lease.  Properly describing the premises being leased is extremely important, especially where properties and car parks are being shared by different tenants.  A solicitor can help review the terms of an agreement to lease and ensure it incorporates appropriate conditions for the type of premises being leased.