A commercial lease is an agreement between an owner of a commercial property (a landlord or lessor) and a person looking to conduct some sort of business on that property (a tenant or lessee). A retail lease is a type of commercial lease in premises that are wholly or predominantly used for retail shop businesses. These leases attract additional protections under the law, so it is important to determine what type of lease your business is entering into. If you want to speak to a lawyer about leases, make sure you speak with a leasing lawyer. Leasing lawyers are the specialists in the field of leasing and should be consulted for legal advice when entering a lease.

Circumstances where the Retail Leases Act 1994 will apply

Each state and territory has specific legislation dealing with retail leases. The legal test for determining whether the premises will attract the protection of state specific retail leasing legislation is to look at the purpose of the tenancy. Is it wholly or predominantly used for selling, hiring or providing goods or services to the public? Premises that are used primarily for wholesaling, manufacturing or storage are usually not considered retail premises. If you have any doubt about whether the state legislation applies to you, ask your leasing lawyer.

Each state also has unique exceptions. In NSW, the Retail Leases Act 1994 does not apply to, amongst other things:

  • Retail shops with a lettable area over 1000 square metres;
  • Shops operated within a cinema;
  • Bowling alley or skating rink by the same person who operates the cinema;
  • Bowling alley or skating rink;
  • Shops in an office tower that form part of a retail shopping centre; and
  • Leases for over 25 years.

The additional protections available for retail leases

Retail leasing legislation is based on consumer protection and imposes additional requirements upon landlords. These include requiring the landlord to provide the tenant with all disclosure documents at least 7 days before entering into a lease (except in South Australia). A disclosure document is a brief summary of the lease outlining information about the property, outgoings and shopping centre (if applicable). A copy of the lease must also be provided as soon as a landlord and tenant enter into negotiations or 7 days before a lease is entered into (depending on what state the property is in). Failure to do so may give the tenant the right to terminate a lease. Retail leasing premises also receive additional protections in relation to unconscionable conduct of landlords. Contact your leasing lawyer for more information on what constitutes unconscionable conduct.

Conclusion

Is your business considering entering a lease? Is it a retail or commercial lease? Make sure you get in touch with your leasing lawyer to assist you with reviewing all the documents carefully before signing. If you do not have a leasing lawyer, LegalVision’s team of experienced leasing lawyers are ready to help. Call 1300 544 755 to get a fixed-fee quote and to organise a consultation.

Lachlan McKnight

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