Part 2: What are the changes to Retail Shop Leasing in Qld?

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Table of Contents

• Disclosure requirements
• Market Rent Reviews
• Conclusion

Welcome to Part 2 on changes to the retail shop leasing laws in Queensland. In today’s part we will discuss the proposed amendments to the disclosure requirement, along with changes to the conditions around market rent reviews.

Disclosure requirements

Under the amended disclosure requirements, lessees may now notify lessors of their intention to waive their one-week disclosure period provided the following occurs before entering the lease:

• The landlord provides the tenant with a disclosure statement; and
• The tenant provides the landlord with its notice of waiver and, provided the tenant is not a government body or a ‘major lessee’, a legal advice report that acknowledges having received advice about the meaning of the waiver.

Lessees may also request an up-to-date version of the disclosure statement from the lessor if they intend on granting a franchise licence or subleasing the premises. The lessor will have 28 days to respond to this request.

In terms of disclosure requirements relating to options, lessors will be required to provide an up-to-date version of the disclosure statement in no more than 7 days after the lessee gives its notice to exercise an option to the lessor. A lessee also has the option of withdrawing its notice to exercise an option, provided it does so within 14 days of receiving from the lessor an up-to-date version of the disclosure statement.

If the lessor fails to meet its disclosure requirements, for example, failing to provide the disclosure statement or providing one that is defective, the lessor can end the lease and have the lessor pay compensation for failing to meet these requirements. This will now extend to when a lessee exercises a renewal option. Of course, the lessor, upon receiving such a notice to have the lease terminated within 6 months, may object to this notice with its own notice, and will do so on the already existing grounds available under the Act. The lessee then either accepts or rejects this notice to object to its initial termination notice, and must do so within 14 days. Failure to do so within this time period will mean the lease continues to operate and the lessee will be deemed to have accepted the objection notice. If the lessee rejects the objection notice, then QCAT will intervene in accordance with the dispute resolution provisions. The lease will continue to operate if the lessor is successful.

In addition, lessees will have to give the disclosure statement no fewer than 7 days prior to their entering the lease.

Disclosure requirement for assignments are also slightly different under the Bill. Assignors will now have to provide assignees with their disclosure statement no fewer than 7 days before whichever of the following events occur first:

• The day on which the assignee enters the Sale of Business contract; or
• The day on which consent to the assignment is sought from the lessor.

It’s also important to note that the assignee may notify its intention to waive its disclosure period under the following circumstances:

• It has received a disclosure statement from the lessor;
• It provides the lessor with a waiver notice, along with a legal advice report (when it is not a ‘major lessee’; and
• The lessor is provided with a disclosure statement no fewer than 7 days prior to the assignee entering into the assignment.

Market Rent Reviews

Certain changes will also apply to the time periods for exercising an option. For example, if a lessee triggers an early market rent review, it will only have a period of 21 days to exercise its option once the market rent has been established.

Also, if a specialist retail valuer is appointed, he or she will have to set timelines of at least 14 days for both parties to respond to the submissions of one another. If either party does not provide these submissions on time, that party will be deemed not to have responded or made a submission.

Conclusion

Stay tuned for Part 3 on changes to the Retail Shop Leases Act (Qld). The following part will discuss a range of provisions, including marketing, compensation, refurbishments, penalties, disbursement and more! If you need to speak with a LegalVision leasing lawyer, or simply wish to get a quote, get in touch with our Client Care team on 1300 544 755.