Breaking Commercial Lease - Real Estate Agents Holding Me Liable?

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Jackie M.

Active Member
23 April 2014
Sydney, Australia
I leased a property last year advertised as a location from which I could live and work out of (I've got screen captures of the original online ads). The real estate agents advised similarly during the inspection it was approved for both residential and commercial use; on that basis they chose to use a commercial leasing agreement which tied me to a 2 x 2 year agreement. On the section re: usage on the lease, they actually specified it was to be for "residential/office" use. Almost immediately after moving in, Sydney City Council did an inspection on my property and advised it was only ever approved for use as a photo studio and that the owner had illegally installed a wall dividing the property and turned one half into a residence (both halves were leased as one property).

For some 20 years different people and businesses had come and go using the property in contravention to the original DA presumably without realising it. After months of back and forth with the Council and the landlord, I was issued with a notice by Sydney City Council to cease and desist with 28 days' notice.

I likewise gave notice to the agent and have now moved out. My problem now is -
- the agent is threatening to hold me liable for the term of the lease (I was there 9 months so there's 1 year and 3 months to go) - this is a quote from their email - "Even with the description and the existing DA from 1992 there is a clause in the lease which stipulates all items in clauses."
- they are withholding my $3800 bond.

I tried NSW Fair Trading and spoke to 2 different people; one said they can't help because it's a commercial lease, not residential lease. Another did a bit of digging and said the agent had lodged my bond as a residential bond and to tell them by their own action they have been treating it as a residential lease and I therefore have a right to move out based on the following section of the Residential Tenancy Act -
109 Agreement frustrated—destruction of, or uninhabitable, premises

(1) This section applies if residential premises under a residential tenancy agreement are, otherwise than as a result of a breach of an agreement, destroyed or become wholly or partly uninhabitable or cease to be lawfully usable as a residence or are appropriated or acquired by any authority by compulsory process.

The cost to me of relocation both into and out of the property has been enormous (5 figures) and the strain on my business once Sydney City Council came on the scene and issued a number of directives over some 9 months for me to stop my activities have been immeasurable. I was happy to cut my losses and move on but now with the agent threatening me I'm wondering on top of being able to be cut loose from the lease and get my bond back, whether I can hold over them the prospect of a counter-suit for damages incurred through their leasing a property under false pretences to discourage them from pursuing anything from me.


Wow sounds like you're in a right pickle. But sounds like your real estate agent will be too, if the office of fair trading hear about it.

Real Estate agents in NSW are governed / regulated by the Property, Stock and Business Agents Act 2002 (PSBAA), which requires them to be licensed and provides a number of penalties for conduct that is not acceptable for agents including misrepresentation and otherwise unconscionable conduct. You can view the act at:

Real estate agents who publish misleading information to the public, (such as your agent appears to have done by publishing an online advertisement stating the property has residential/commercial zoning) or make false, misleading or deceptive representations to induce someone to enter into a contract, are liable for penalties of up to $22,000.

Also, the PSBAA specifically states at s53, that

"No term or provision of any agreement...for the sale and purchase of land or any interest in land operates to prevent the purchaser from claiming or being awarded damages or any other relief in respect of any misrepresentation or concealment in connection with the sale and purchase of the land or interest."

The office of Fair Trading website provides this helpful explanation of an agent's duties:
It also provides an outline of the rules of conduct for agents here:


So this is how I would proceed. Start by writing a formal demand to the real estate agent for the return of your bond and any monies owing to you, upon failure of which you will report their numerous breaches of the Property, Stock and Business Agents Act 2002, to the Office of Fair Trading and institute proceedings for the recovery of your bond, and the costs associated with your move, and name a figure). Make sure you stipulate a time within which they are to pay your money.

Then if they don't pay within the time frame you have stipulated. Send another letter saying that you are going to the Office of Fair Trading (to give them a final chance).

Then go to the Office of Fair Trading with all of your evidence. They will likely be able to tell you the best course of action to institute legal proceedings to recover what is owing to you.
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