The term “Retail Lease” is used to describe Leases of retail premises which are governed by the Retail Leases Act 1994. This is a specific piece of legislation applying to a written or oral agreement to lease retail premises in New South Wales. There is similar legislation in other states.
Retail Lease Checklist:
- The landlord must provide a copy of the draft Lease and the Retail Tenancy Guide before the Lease is entered into.
- The landlord must provide the tenant with a Disclosure Statement 7 days prior to entering into the Lease.
- The tenant must give the landlord a Lessee’s Disclosure Statement no later than 7 days after the tenant receives the Landlord’s Disclosure Statement.
- What is the length of time of the Lease? Is the tenant to be given an option? Are there any circumstances when the term of the Lease could be reduced if, for example, the premises were destroyed? The term of a Retail Lease is extended to 5 years unless a Section 16 Certificate is provided certifying that the tenant agrees to a Lease for a term less than 5 years.
- There are strict limitations on the ability of the landlord to recover some outgoings and in some cases the landlord will be required to have the amount of outgoings audited annually.
- A Security Deposit paid by the tenant must be lodged with the Retail Tenancy Unit. A landlord and tenant cannot agree to retain and invest the Security Deposit.
- Special provisions apply for premises in a retail shopping centre.
- The checklist for Commercial Leases set out above should also be considered and applied where necessary.
- The Retail Leases Act prohibits “ratchet clauses”; clauses which prevent rent from decreasing.
For further lease information contact our team on (02) 4926 1944.