So you have been running your business on full steam and before you know it, your shop lease is about to expire. But what happens next if you have no further option to renew? Below is an overview of what the retail legislation requires the lessor to do and what are your rights if the lessor fails to comply with the notice provision prescribed by law.
Lessor’s Obligation to Give Notice
Under the Retail Leases Act 1994 (NSW), the lessor has a positive obligation to give you written notice that your lease is coming to an end and if the lessor intends to renew your lease or requires you to vacate the premises at the expiry of the lease term (Lessor’s Notice). The lessor must give you this notice at least 6 months before your lease expires. With a short term lease of fewer than 12 months, the notification period is between three and six months before the lease ends.
Under the Act, if the lessor fails to notify you in writing, your lease will be extended by law so that the expiry date is not until six months from the date of the Lessor’s Notice. You have a right to terminate the lease at any time during the six months’ extension period by giving not less than one month’s written notice to the lessor.
During the extension period of your lease (by operation of law), the lessor is prohibited from publicly advertising the availability of your shop premises unless:
- The lessor has offered you a renewal or extension of the lease, and you have not accepted the offer.
- The lessor has informed you by written notice that it does not intend to offer you a renewal or extension of your lease, and there are therefore no arrangements to allow you to remain in possession of the shop premises.
- You have given the lessor written notice that you do not wish to enter into a negotiation or for the renewal or extension of your current lease.
Vacating and Yielding Up
If your lease has come to an end and the lessor has provided you with written notice as required by law, then generally you will be required to make good/yield up the premises to the standard stated in your lease. The lessor may ask you to remove all of your fixtures and property and make good any damage caused by the removal. The lessor may permit you to leave your property or even pay a cash sum instead of your make good obligation. Either way, you should seek confirmation in writing of what you landlord requires at the expiry of your lease. If you have provided a security deposit or bank guarantee, provided that the lessor has not drawn against the security, you should ask for its return within a reasonable time after the expiry date (if the timeframe has not already been stated in the lease).
It is important as a tenant to understand the full extent of your rights under the retail legislation especially if these rights are often not written in the lease. At LegalVision, we can help you with reviewing your lease and understanding your rights under the retail legislation. If you have any questions about your lease, get in touch with our commercial leasing team on 1300 544 755.