When entering a lease, it is often the case that fit-out works are required, so that the space is adapted and reflects the business that will be using it. Fit-out works refer to the interior of the premises, meaning any furniture, signs, decorations or other aspects that are needed for the business. To undertake a fit-out work, it is important to consider what is involved, including documentation, costs, and responsibilities.
Fit-out Deed & Guide
To undertake fit-out works, the landlord may provide a tenant with a fit-out deed (legal document & essentially a licence to access the premises before the lease itself commences) and a fit-out guide. A landlord may ask for copies of other documents to be supplied or have specific conditions before they grant the access licence – this can include the signed lease or insurance. It is important to note that a separate fit-out deed document or licence might not be given if it is specified clearly in the lease agreement, but consent is still essential to ensure you do not breach any terms (more on that below).
The second document, a fit-out guide, is different from the deed because it is not legally binding. Instead, it is a guide on what installations and fixtures can be installed in the premises, including any restrictions. A tenant does still need to comply with the guide, especially if they operate in a commercial space.
Do I need landlord consent?
Any works on the leased premises need the consent of the landlord. This process can involve additional documents, including any plans or drawings, which are to be sent to the landlord and approved before the works can start. As a tenant, do not worry if these seem a bit daunting – often a professional contractor and specialist would be the one making these drawings based on your instructions. Depending on the nature of the works, if council approval is required it is the responsibility of the tenant to seek this approval as well. Council approval can involve checklists or development approvals.
Who bears the cost of fit-it works?
In most cases it is the tenant who is responsible for the costs of any fit-out works themselves (including hoarding), as well as the paperwork for landlord consent (meaning, the cost of drawings or plans made by contractors) or any needed council fees for approval. Sometimes a landlord can financially contribute to the fit-out works cost, but this depends on negotiation with your landlord and can exclude the paperwork and council fees.
What are my responsibilities while the fit-out works are happening?
A tenant’s responsibilities usually revolve around being the principal contractor – in other words, the one who ensures that contractors doing the work comply with WHS (work health and safety legislations) and manage the construction itself. Those doing the work also need to be informed, by the tenant, of the fit-out guide specifications (and the fit-out deeds), as well as the details of the planned works. This can seem tedious, especially if you do not have the expertise to do so; in these cases, a tenant can ask their landlord for a right to pass this to the actual contractor doing the work.
Depending on the nature of the building, the building could have its own works such as base construction, so the duration of these works is key. During the fit-out period, the landlord might also have their own works going on. If this does happen, ensure that there are issues or interference between the works by speaking with the landlord prior to formal agreements.
Do I have any responsibilities after the fit-out works are completed?
Yes – your landlord can ask you for a completion certificate which details that the agreed fit-out works have indeed been done. If the works are done before the fit-out period end date (agreed to before with the landlord), then you can start operating in the premises because the lease will start.
Fit-out works are a central part of preparing a newly leased premises for your business to operate, and it is important that you are aware and clear on what is involved including the approval that is needed. For more information or assistance, get in touch with our team via the contact form or by calling 1300 337 997.