Are you thinking about a retail shop lease?
Before You Sign!
Ensure that the Lease document contains all the terms and conditions you need to use the property. All Retail Shop Lease documents should be reviewed by us before you commit yourself to the obligations and responsibilities.
Before signing, we can review the lease so you can minimise the risks and maximise your opportunities. The recommended practice is for the Landlord to give possession of the property to the Tenant only after all documentation is signed and exchanged and the initial rent, bond and costs are paid.
Retail Shop Leases Act
The first question to be answered when reviewing a Lease is whether the Retail Shop Leases Act applies to the lease.
Some common terms:
Lessor or Landlord: the owner of the premises
Lessee or Tenant: the person, company or trust renting the premises.
Assignor: the Tenant who transfers their interest in the lease to someone, eg when selling a business conducted on leased premises
Assignee: Someone who takes over an existing lease from a tenant > eg, when buying an existing business carried on at leased premises.
RSLA: Retail Shop Leases Act
Disclosure Obligations – RSLA
Retail Shop Leases Act imposes strict disclosure obligations upon both the landlord and the tenant, which we summarise below:
1. Lessor’s disclosure obligation
At least 7 days before a prospective lessee of a retail shop enters into a retail shop lease (the disclosure period), the lessor must give to the person a draft of the lease and a disclosure statement.
If the lessor does not comply or gives a defective disclosure statement, the lessee may terminate the lease within 6 months after the lessee enters into the lease and the lessor must pay the lessee reasonable compensation for damage suffered. Different obligations apply for a major tenant & there are some limitations and exceptions to these disclosure obligations.
2. Lessee’s disclosure obligation
Before entering into a retail shop lease, the prospective lessee must give the lessor a disclosure statement.
3. Assignor’s & Assignee’s disclosure obligations
An assignor must give a prospective assignee a disclosure statement at least 7 days before asking the lessor to consent to the assignment.
An assignee must give a disclosure statement to the assignor before the lessor is asked to consent to the assignment.
4. Lessor’s and Assignee’s disclosure obligations
At least 7 days before an assignment of a retail shop lease is entered into (the disclosure period), the lessor must give the prospective assignee a disclosure statement (Section 1 above) and a copy of the lease. Different obligations apply for a major tenant.
5. Legal advice report
A prospective lessee or assignee of a retail shop (excluding a major lessee) must obtain a legal advice report from a Lawyer. The Lawyer must review the entire lease and provide the tenant with comprehensive advice before providing the report. The tenant must provide that report to the Landlord.
6. Financial advice report
A prospective lessee or assignee of a retail shop (excluding a major lessee) must obtain a financial advice report from an Accountant. The Accountant must review the entire lease and provide the tenant with comprehensive advice about the financial costs of the Lease before providing the report.
7. Effect of failure to comply with obligations
If a required document is not provided and the relevant lease or assignment is entered into, a retail tenancy dispute exists and the affected person, within 2 months, may ask the tribunal for an order that the document be provided.
8. Lessor to give lessee certified copy of lease
Within 30 days after a retail shop lease is signed by the parties, the lessor must give the lessee a certified copy of the signed lease.
Costs & Outlays
The expenses payable by Tenants may include registration fees, mortgage consent fees, survey fees, and sketch plan fees. There is no stamp duty payable on a Lease.
After confirming your leasing requirements, we can inform you as to the costs involved in arranging your lease. Legal costs for preparing a retail shop lease are paid by the landlord. In all other cases they are paid by