Legal issues for artists to consider when occupying premises

If you are an artist occupying premises owned by someone else such as a studio, you have legal obligations and rights while on the premises.

Identify the occupier

Your first task is to identify who is to be legally classified as the occupier. The occupier may be an individual or a partnership of individuals or a company or an incorporated association. Any lessee (and directors of a company or association) should be over 18 years old otherwise their legal obligations may not be enforceable against them. Consider the tax consequences when choosing which person or entity will be formally named as occupier; the ability to claim tax deductions for lease expenses is only allowed if the taxpayer incurred such expenses for the purpose of earning income. This includes lease expenses-they can only be claimed as income tax deductions if the person earning income on the premises is the same person incurring expenses to occupy the premises. Generally, lease expenses are tax deductible to the extent incurred by a person for the purpose of earning income.

You may be liable for actions of your co-occupiers

Keep in mind that if there is more than one occupier, all of them will be liable to have the whole of the rent and other lease payments paid to the landlord. In many cases, an occupier will also be liable to pay all damages suffered by another party as the result of the action of other co-occupiers on the premises. If a fixed term lease is entered into, the rent and other outgoings can be claimed by the landlord against all the lessees individually for the whole term of the lease, even if an individual occupier vacates early with the consent of the other lessees.

Identify your landlord

Also identify the landlord you are dealing with. A search of the title to the land at the Land Property Management (Lands Titles) Office is the best way to make sure who the land owner is. Only the registered land owner or duly appointed agent can authorise a lease or other form of permission to occupy premises. Sometimes you may have to deal not with the registered land owner but with a property manager or a relative of the owner or another occupier who is sublicensing part of the land; in those cases, ensure that the person is authorized by the registered owner, failing which that person cannot bind the owner to allow you to continue occupying your premises. Ensure that your landlord has an Australian Business Number, try to receive tax invoices for your rent so that you can claim input tax credits on your payments of GST on your rent.

Making payments

You will normally have to pay rent, outgoings and a bond when you occupy premises. Insist on a receipt for all payments unless paying by bank transfer. Your payments will be in addition to GST only if that is specified in a contract/lease that you sign; if not, GST will be deemed to be inclusive of the amounts agreed to be paid. Only rent for residential purposes is exempt from GST. As a result, you should register for GST to receive an Australian Business Number to claim input tax credits on the GST that you pay.

You are entitled to see your landlord's accounts showing total outgoings for the building to which you are contributing. Before agreeing to occupy, make sure that the proportion of your contribution to the total outgoings is agreed and also that that the type of building expenses which you have to contribute is agreed; they may include property management fees and building insurance. A bond deposit form should be signed by all occupiers contributing to the bond and wishing to claim a refund when vacating. The bond may be held by the landlord or property manager because legislation requires only residential bonds to be held by the local Residential Tenancies Tribunal.

Identify what use of the premises you will be permitted

Most leases or licenses will allow you to occupy for a specific permitted use. Try to have your lease describe the permitted use widely. As occupier, you will be expected to obtain all permits and licenses for the permitted use so it may be good practice when signing your lease/licence to make is subject and conditional upon you getting formal Council approval to your permitted use. Usually commercial or studio premises will not be allowed to be used as a residence. A landlord is allowed to avoid warranting that the premises are fit for your permitted use, placing the onus on you to ensure that the building structure and fittings and services will be suitable; look out for adequate light, ventilation, access and security. Your landlord is not obliged to upgrade a building after a lease commences except to comply with legal requirements for health, safety and perhaps providing services for disabled people. Use of heavy machinery and toxic or hazardous substances are usually prohibited so make sure you get landlord's consent beforehand or you could be evicted.

Repairing and maintaining your premises and the building

Usually an occupier has to get landlord approval for any alteration to the building, addition of fixtures, placing of wall hangings, installation of heavy equipment. The landlord is expected to pay for repairs to the building through normal wear and tear and aging and deterioration and weather damage. However, as long as the building remains fit for habitation and does not present a hazard, defects in a building by way of wear and tear can be left as is. The occupier is strictly liable for all damage caused by the use of the premises during occupation, even if caused by visitors and accidental. The landlord is not obliged to allow you to repair damage but may charge you market rates if repair costs are proved to have been incurred by the landlord.

All parts of the premises authorised for occupation must be maintained by the occupier in the condition they were in at the commencement of occupation, including a garden. Also, if the premises are a whole building, then roof gutters will have to be kept clean by the occupier. Damage caused by unauthorised entrants or burglars is expected to be the responsibility of the landlord when the lessee did everything possible to prevent the intrusion such as by locking windows. To limit your maintenance obligations, try to have your written lease/licence specify that you are liable to maintain only the area inside the boundary walls of your premises, excluding gutters and building services such as air-conditioning and plumbing.

Damage that you cause to the building

The occupier is responsible for any damage or injury occurring on the land through the negligence of that occupier. This means an occupier should insure against public risk liability arising on any part of the premises being occupied. Insurance is available to lessees to cover damage caused to leased premises but ensure that cover will still be provided when the occurrence of damage amounts to a breach of the lease or negligence by the lessee.

Make sure to define the boundaries of the premises to ensure the precise area being occupied. A landlord is not normally responsible directly to an occupier for injury or damage occurring on the premises unless caused by a hidden hazard in the premises or by the landlord’s failure to repair the building after being asked to do so by the occupier or by the landlord’s breach of health and safety regulations. An occupier (not the landlord) is legally liable to prevent nuisance to neighbours occurring on the premises and to comply with noise controls under.

Looking out for all these perils will at least prepare artists for most legal issues to be dealt with while working on other people's premises.

Nic Giannantonio is a solicitor at the Australian Government Solicitors on secondment to Arts Law.

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