Can a company enter into a General Tenancy Agreement?

A question we regularly receive on the PMSS hotline is: can a company enter into a General Tenancy Agreement Form 18a?

Under the Corporations Act (Section 124), a company is considered a legal entity and can enter into a contract. Property managers need to exercise the same due diligence in their tenancy selection criteria and procedures in this situation as they would if an individual applied for a residential property.

A property manager should consider the following points:

• Request the corporate tenant provide a current ASIC search for a new tenancy and before entering into a new Fixed Term Agreement. This will ascertain who the director(s) of the company are and confirm who has the legal capacity to enter into agreements on behalf of the company.

• If you have concerns about the currency or validity of the search provided by the corporate tenant, conduct your own ASIC search if the owner is agreeable and the PO Form 6 has authority for you to incur this expense for the owner.

• Independent evidence such as an accountant's letter or copies of taxation assessments will support the company's ability to meet the financial obligations of the proposed tenancy terms.

• Check trade account references for the company and/or the individual director/s.

• Rental references for the company and or the individual director/s should also be checked.

• Seek to have a director(s) of the company or the intended occupant as a co-tenant. This provides the Lessor greater protection if the company goes into liquidation.

Additionally, the approved number of occupants should be clearly stated on the General Tenancy Agreement Form 18a and the special terms of the agreement should contain provisions in relation to the occupation and use of the premises. Below is a link to a QCAT Appeal relating to a Corporate Tenant which highlights the importance of due diligence for both an initial tenancy and a subsequent new fixed term agreement.

Novais v Raine &; Horne Wynnum Manly & Anor [2018] QCATA 57

REIQ Members seeking further advice on this topic or any other area of property management can call or email the Property Management Support Service Team. Not a member? Join us today!

Important disclaimer: This article is provided for general information only, and the author is not engaged to render professional advice or services through this article. Readers should satisfy themselves as to the correctness, relevance, and applicability of any of the above content, and should not act on any of it in respect of any specific problem or generally without first obtaining their own independent professional legal advice.