What are commercial and retail tenants’ rights in compulsory land acquisitions? November 26, 2021

When faced with compulsory land acquisition, business tenants need specialised legal support to protect their interests

When we think of compulsory land acquisition, it is often an image of residential homes being bulldozed to make way for a super-highway. However, compulsory land acquisition also has a significant impact on businesses that lease premises. What should a business tenant know when faced with a compulsory land acquisition? What is the effect on the property lease? Find out more about business tenants’ rights in compulsory land acquisition. 

What is an interest in land?

Under Victoria’s Land Acquisition and Compensation Act (the Act), every person who has an interest in land affected by (and immediately prior to) a compulsory acquisition is entitled to compensation. 

This includes business owners with a lease. 

As a tenant of an acquired property, you are generally entitled to make a claim for compensation in relation to your leasehold interest, as well as other losses that you suffer because of the impact on your business.    

Can I continue to run my business after the property has been compulsorily acquired?

After you are served with a notice of intention to acquire land, as a tenant you generally have three months to relocate from the land.  In some cases, the acquiring authority may give you more time to stay in the premises, however fair market rent is payable. 

We recommend that you look for alternative premises as soon as possible after receiving the notice. If you are forced to relocate, the more evidence you can provide to the acquiring authority in terms of the costs and expenses incurred because of the acquisition, the stronger your claim will be.

What type of compensation am I entitled to claim?

Each business is unique, and therefore your claim for compensation needs careful consideration.  The types of claims for a business owner may include: 

• Costs associated with locating alternative premises (including engaging agents to help you find an alternative location)
• Removal and reinstatement expenses, for example fit outs and service connections to the premises
• Loss of goodwill 
• Loss of profit between the time the land is acquired and the time you have found new premises
• Loss of stock 
• Costs of advertising your new premises
• Storage costs
• Any legal, valuation or other professional expenses  

How can MDW help me enforce my tenant rights in a compulsory land acquisition?

We can help your business by working through the value of the business and associated losses. We have significant experience in working with different types of experts who can be retained to provide reports to substantiate your claim (financial loss, valuations etc). 

If the land on which your business operates has been acquired, or if you are concerned that it is going to be acquired, please contact us to discuss your tenant rights in compulsory land acquisition.

For further information, please contact Andrew Power