The commercial or retail lease will determine your rights and obligations as a tenant. The lease usually includes details of the terms of your lease and your options to renew the lease. By signing the lease you commit (or your company commits) to paying rent throughout the term of the lease in exchange for the right to occupy the premises.

There are specific circumstances when a tenant can get out of a commercial or retail lease.

Assign the Retail Lease

The ability to assign the lease is a common clause included in commercial or retail leases. This means that you can transfer the lease from one tenant to another. Western Australian laws usually confirm that a transfer of a lease can only be withheld when there are reasonable grounds. A reasonable ground could be that the incoming tenant does not have the economic viability to pay the rent for the length of the term or that the incoming tenant has the intention to use the premises in a way other than its intended use.

A Lease Assignment Agreement should be drafted in order to confirm that the assignor will no longer be liable for the rent or other lease obligations. The landlord will need to approve this Agreement.

Sublease

Similar to assigning the lease, a tenant can find a sublessee to occupy the premises. The right to sublease will usually be included in the commercial or retail lease and the landlord will also need to approve the sublease. Although the sublessee will take over the physical occupation of the premises, you (or your company) will still be bound by the terms of the lease as the lessee. This means that you will be responsible for fulfilling the legal obligations of the lease, including paying rent in the case of a sublessee’s default.

Absence of a Disclosure Statement

As part of the commercial leasing laws in Western Australia, tenants are to be provided with a disclosure statement. If a disclosure statement is not provided, is incomplete or contains false or misleading information, the tenant can terminate the lease in writing if it is within six months after the commencement of the lease. If however the disclosure statement is incomplete, false or misleading, but the landlord has acted honestly and reasonably and the tenant would ultimately be in the same situation if the failure did not occur, the tenant’s right to termination is removed.

Absence of a Tenant Guide

A Tenant Guide must also be provided together with any retail shop lease. The Tenant Guide outlines the retail tenancy laws in Western Australia, including an outline of the tenant’s rights and obligations. The Tenant Guide needs to be given when the tenant enters into possession of the premises or when the lease is signed. If the Tenant Guide is not incorporated into the lease, the tenant has 60 days of entering into the lease to terminate by written notice.

Breach of Contract

If there has been an essential or fundamental term of the lease that has been breached, you may be able to terminate if the terms and conditions of the lease allow for it. The common law also determines certain circumstances when a contract may be void. This may include a repudiation of the terms in the lease or the provision of misleading or false statements that induced a party to enter into the agreement.

It would be important to speak to a lawyer that specialises in commercial leases to determine whether you would be able to terminate a lease based on a breach of contract.

Conclusion

Entering into a lease is a big commitment and the circumstances for terminating the lease from the tenant’s perspective are not always so clear cut. Speak to a qualified commercial lawyer before you enter into a lease agreement so you know what your rights and obligations are in case you do need to get out of your commercial or retail lease early.

LegalVision has a team of great commercial property lawyers who can assist you. Please call our office on 1300 544 755 and our Client Care team will happily provide you with an obligation-free consultation and a fixed-fee quote.

James Douglas

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