Retail Leases Act

21 April 2010

The Retail Leases Act came into operation on 1 May 2003. Both Landlords and Tenants you have certain rights and obligations under the Act that cannot be contracted out. It is important that both parties are aware of these rights and obligations before a lease is entered into.

The Retail Lease Act is in effect consumer protection legislation which has mechanisms in place to protect the Tenant’s interests given that the Landlord is usually in a stronger bargaining position than the Tenant.

Some of the main features of the Act are summarised below.

1. Any retail Leases that have a term of less than one year will not be covered by the act and there are also other circumstances where the Act will not apply.
2. All Leases must have a minimum term of 5 years (including options) unless the Small Business Commissioner allows a shorter term upon application by the Tenant only.
3. The Landlord must provide a copy of the form of lease at the time of entering into negotiations together with a copy of the information brochure. Failure to do so results in a penalty of over $5,000.00
4. The Lease must be in writing, if not a penalty of more than $1,000.00 applies
5. The Landlord must notify the Commissioner in writing of specified lease details within 14 days of the lease being executed by all parties and a penalty of more than $1,000.00 applies for failure to do so.
6. At least 7 days before a Tenant enters into the lease the Landlord must give to the Tenant:-
7. A disclosure statement in the prescribed form;
8. A copy of the proposed lease
9. If a Tenant has not been given a disclosure statement before entering into a lease the Tenant can give the Landlord a notice, between 7 and 90 days after the commencement of the lease, stating that the Disclosure statement has not been provided. Once the Tenant has given such a notice
10. The Tenant may withhold payment of rent until the day on which the Landlord gives the Tenant the disclosure statement; and
11. The Tenant is not liable to pay the rent attributable to the period from and including the day on which notice was given until and including the day on which the Landlord gives the Tenant the disclosure statement; and
12. the Tenant may give the Landlord a written notice of termination at any time before the end of 7 days after the Landlord gives the Tenant a copy of the disclosure statement.
13. A Landlord is not entitled to recover from the Tenant the amount for the Landlord's:-
14. legal or other expenses in relation to the preparation of the lease; and
15. land tax obligations in respect of the premises
16. There are also limits on the types of management expenses that can be recovered from a Tenant.
17. Security deposits must be lodged by the Landlord on behalf of the Tenant in an interest bearing account. Interest accrues for the benefit of the Tenant but is added to, and kept with, the deposit.
18. The Landlord is not entitled to unreasonably refuse to accept a guarantee from an authorised deposit taking institution in the place of personal guarantees or cash security deposits.
19. The are also a number of provisions in the Act which may override the terms of the lease as insofar as they relate to the late date for the exercise of an option or the date on which the lease terminates.

The summary above is by no means comprehensive but as can be seen there are a number of matters that need to be addressed when entering into a lease either as a Tenant or as a Landlord. If you would like further information or advice on any of the above matters (either as a Landlord or as a Tenant) or assistance in negotiating or drafting your retail premises lease please do not hesitate to contact us.