In brief: A further decision by VCAT in Moussa v Herben (Building and Property) {2018] VCAT 1717 makes it very clear that a leaking roof in a building is likely to be a landlord’s responsibility to fix the roof, which may mean replacing the roof, unless of course the leak has been caused by the tenant.

What you need to know:

If you are leasing or managing a property on behalf of a landlord, it is very important that if the roof leaks at the commencement of the lease, this is clearly documented. The landlord’s responsibility will be to maintain the premises in the condition at the commencement of the lease. Accordingly, if the roof leaks, this needs to be clearly documented in the lease, so that the tenant cannot seek that the landlord fix the roof. Alternatively, if you are managing a property on behalf of the landlord and the roof of the premises develops a leak, it will be the landlord’s responsibility to fix the leak, which may include replacing the roof.

Background:

I have been involved in recent cases where a landlord refused, or at least delayed in fixing a leaking roof, and the tenant successfully negotiated termination of the lease.

If the lease is renewed, a Court will look at the condition of the roof when the lease was first entered into and not at the date that the lease was renewed. VCAT, in the above-mentioned case, cited with approval the decision in Versus (Aus) Pty Ltd v ANH Nominees Proprietary Limited [2015] VSC 515 which reinforced the requirement that the premises are viewed at the time the original lease was entered into and not at the time of the renewal for the purposes of establishing a landlord’s obligations under section 52 of the Retail Leases Act 2003 (Vic).

Conclusion:

For leasing executives, it is vital that if the building is defective in any way (including a leaking roof) that this is appropriately documented in the lease and it is acknowledged by the tenant that it leases the property in its current condition and the landlord has no obligation to remedy the roof. For property managers, if it is a retail lease, you need to be aware of the condition of the property but if the property develops a leaking roof during the term, it will be the landlord’s obligation to fix the leaking roof. Valuers will need to take into account a defective property in undertaking a valuation. However, where a leaky roof develops during the term of a retail lease, this condition can be ignored as section 52 of the Retail Leases Act 2003 (Vic) will apply. In other words, a tenant will have rights against the landlord pursuant to this section and the rent does not need to be discounted because of this fact.