Navigating maintenance obligations in Victoria requires a sophisticated understanding of the interplay between the Retail Leases Act 2003 (Vic), which commenced on 1 May 2003, and common law commercial lease principles. In the Victorian jurisdiction, the distinction between "structural" and "non-structural" repairs is not merely a matter of lease drafting; it is often governed by strict statutory mandates that override conflicting contractual terms.

Statutory Mandates under the Retail Leases Act 2003

For properties classified as "retail" under the Act, Section 52 establishes a non-excludable obligation for the landlord to maintain the retail premises in a condition consistent with the condition of the premises when the lease was entered into. This obligation covers:

• The Structure: Maintaining the roof, exterior walls, and foundations.
• Fixtures and Fittings: Maintaining landlord-provided fixtures, appliances, and fittings relating to services like gas, electricity, and water.
• Plant and Equipment: Maintaining items such as air conditioning and lifts.
• Essential Safety Measures (ESM): Ensuring compliance with Building Regulations 2018 (Regulations 223 and 224).

While Section 52 requires the landlord to perform these repairs, the Retail Leases Amendment Act 2020 validated clauses that allow landlords to recover Essential Safety Measures (ESM) costs from tenants. However, under Section 41, landlords are strictly prohibited from recovering capital costs (improvements or replacements of a capital nature) from retail tenants.

Delineating Tenant Maintenance and "Make-Good"

While the landlord maintains the "bones" of the building, the tenant is typically responsible for the "fit-out" and day-to-day maintenance.

The Maintenance Standard

Tenants are generally required to keep the premises in "good functional order and repair," excluding fair wear and tear. This includes internal surfaces, floor coverings, and any fixtures installed by the tenant. Failure to maintain these can result in a breach of lease notice and potential damages.

Make-Good Obligations

Upon the expiration of the term, "make-good" clauses typically require the tenant to:

1. Remove all tenant fixtures and equipment.
2. Repair any damage caused by such removal.
3. Re-paint or re-carpet if specified in the lease.
4. Return the premises to a "base building" or "shell" state, depending on the specific wording of the "Condition Report" filed at the commencement of the lease.

Essential Safety Measures (ESM) Compliance

In Victoria, the Building Act 1993 and Building Regulations 2018 (Regulations 223 and 224) place the legal responsibility for ESM compliance—including fire extinguishers, smoke alarms, and sprinkler systems—on the building owner. For retail leases, the Retail Leases Amendment Act 2020 allows landlords to recover the costs of ESM maintenance, services, and repairs from tenants as outgoings. This recovery is valid for costs incurred on or after 23 September 2020 for both new and existing leases, provided the lease and disclosure statement (or annual estimate of outgoings) explicitly state that ESM costs are recoverable. This can also include the cost of installing ESMs as part of a fit-out. For non-retail commercial leases, the ability to recover these costs from the tenant depends entirely on the specific drafting of the "Outgoings" clause in the lease agreement.

Actionable Compliance Roadmap for Landlords

To mitigate risk and ensure statutory compliance in Victoria, landlords should execute the following:

• Audit the Lease Classification: Determine if the occupancy falls under the Retail Leases Act 2003. If it does, ensure ESM cost recovery is explicitly documented for costs incurred after 23 September 2020, while ensuring capital costs are not passed to the tenant.
• Maintain a Detailed Condition Report: Always append a comprehensive Condition Report with high-resolution photography to the lease. This is the primary evidence used to enforce "make-good" obligations.
• Annual ESM Inspection: Engage a qualified surveyor to provide an Annual Essential Safety Measures Report (AESMR). Failure to do so can result in significant fines from the Victorian Building Authority (VBA).
• Clear Delineation of Plant & Equipment: Explicitly list which items (e.g., HVAC units) are "Landlord’s Installations" versus "Tenant’s Fit-out" to avoid disputes over repair liability.

Data-Driven Compliance Summary

The following quick facts are derived from the primary governing legislation for victoria.

Automated Compliance with Landager

Landager's platform is designed to operationalize the legal requirements mentioned above. By automating notice periods, rent increase tracking, and documentation storage, we ensure that landlords in victoria stay within the letter of the law without manual oversight.

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