In Short
- Understand state-specific retail lease laws to ensure compliance and protect your business interests.
- Create and maintain a lease register to manage key lease details, deadlines, and risks efficiently.
- Include dispute resolution clauses in your leases to minimise legal costs and avoid disruptions.
Tips for Businesses
Set up a detailed lease register to centralise important information, such as lease terms, rent reviews, and potential risks. Always review state-specific lease laws before signing new agreements, and consider adding mediation clauses to handle disputes quickly and cost-effectively. Stay proactive to maintain smooth operations across all locations.
Many large businesses operate brick-and-mortar stores, often resulting in multiple retail leases across various states and territories. Each state or territory has specific laws governing the relationship between businesses and landlords. Before signing a lease, it is essential to understand any legislative changes and their potential impact on your business. This article offers guidance on effectively managing multiple leases and navigating legislation to protect your business.
Retail Lease Legislation
One of the legislation’s primary purposes is to protect smaller business owners. This is achieved by enforcing minimum standards to ensure the lease is fair to each party but still allows a reasonable amount of freedom to negotiate the terms. Below is a list of the legislation each state/territory has enacted to protect retailers:
- Australian Capital Territory: Leases (Commercial and Retail) Act 2001 (ACT);
- New South Wales: Retail Leases Act 1994 (NSW);
- Northern Territory: Business Tenancies (Fair Dealings) Act 2002 (NT);
- Queensland: Retail Shop Leases Act 1994 (QLD);
- South Australia: Retail and Commercial Leases Act 1985 (SA);
- Tasmania: Fair Trading (Code of Practice for Retail Tenancies) Regulations 1998 (Tas); and
- Victoria: Retail Leases Act 2003 (Vic).
Does the Act Apply to My Premises?
Some state legislation provides a comprehensive list of what is considered a retail premise. This should also serve as a handy guide for other states and territories.
Notably, some states set minimum lease terms or shop size limits that can exempt your premises from the Act.
For example, in New South Wales, a retail lease must last between five and twenty-five years and be for a shop with less than 1,000 square meters of floor space.
Other factors that determine whether your lease qualifies as a retail lease include the store’s location, such as being in a:
- shopping centre;
- a cinema complex; or
- a high-rise building.
This guide will help you to understand your options when you purchase a business with leased premises.
What You Need to Know
Organising a Lease Register
Establishing a lease register can be highly beneficial if you have multiple leases, especially across different states and jurisdictions. Your lease register should include key details such as:
- the start and end dates;
- lease term;
- option periods and their lengths;
- initial rent;
- rent review methods; and
- any potentially risky clauses for your business to note.
Risky clauses may include:
- make-good obligations;
- maintenance and repair duties;
- air-conditioning and fire safety responsibilities; and
- relocation or demolition clauses.
Tenant companies must keep an up-to-date lease register. This register:
- promotes organised record-keeping;
- ensures compliance with lease terms;
- supports financial planning for future rent and expenses; and
- helps manage leases efficiently across various locations.
A lease register centralises critical lease details and deadlines, enabling well-informed decision-making and reducing risks associated with leasehold interests.
Legal Advice
In certain states, like Queensland, you must obtain legal and financial advice before signing a lease if you own fewer than five retail businesses. While this requirement may not typically apply to larger enterprises, it is still valuable to be aware of it.
Disclosure Documents
In every state and territory, landlords must provide tenants with disclosure documents before entering a retail lease. These documents summarise the lease and include important details about the property, such as:
- past outgoing expenses; and
- other relevant information, like foot traffic in a shopping centre.
Lease Registration
A ‘registered lease’ is recorded on the property’s title at the state or territory Land Titles Office. Registering your lease establishes a leasehold estate, giving you a legal interest in the property. This can protect you in situations like a landlord defaulting on mortgage payments and the bank foreclosing on the property. While the bank has a first right to the property through the registered interest of the mortgage, a registered lease demonstrates your right to occupy the property.
Similarly, if your landlord sells the property to a third party, this ensures that the ownership change does not affect your rights under the existing lease. In some states, you must register a lease if its term exceeds a specific period, typically three years. For shorter lease terms, automatic protection generally applies.
The Importance of Dispute Resolution
Your time is valuable, and while you may have the resources to pursue legal action against a landlord during a dispute, doing so can be inefficient, costly, and potentially harm your reputation among commercial property owners. Beyond the legal costs, if a lease is terminated due to a dispute, you will face the expenses of:
- moving;
- setting up a new location; and
- dealing with lost sales during the transition.
Consider including an alternative dispute resolution process in your lease agreement to avoid litigation or lease termination. For example, you can require mediation as the initial step. An independent mediator will work with both parties to facilitate a compromise. Resolving disputes early benefits everyone involved—landlords prefer occupied properties, and mediation can save you time and resources.
Key Takeaways
To effectively manage multiple leases across different states, you must:
- understand state-specific laws;
- maintain a detailed lease register;
- register leases when necessary; and
- include dispute resolution clauses in your agreements.
These proactive steps will help you ensure compliance, reduce risks, and keep your operations running smoothly.
If you need help understanding your lease, our experienced leasing lawyers can assist. As part of our LegalVision membership, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today at 1300 544 755 or visit our membership page.
Frequently Asked Questions
Each state and territory has different regulations governing landlords’ and tenants’ relationships. Understanding these laws helps ensure compliance and protects your business interests when managing multiple leases.
A lease register is a centralised record of key lease details, such as start/end dates, rent terms, and clauses. It helps with organised record-keeping, compliance, financial planning, and risk management across multiple locations.
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