Skip to content

Part 4: Tenant rights under Retail Shop Lease

Welcome to part 4 of “Tenant rights under a Retail Shop Lease” This article will discuss the circumstances under which your landlord may refuse the assignment of the lease to another party, what to consider when your initial lease term is nearing its expiry date, and how to respond to the landlord’s misleading and deceptive conduct.

Refusal to assign the retail lease

Landlords may, in constructing the terms of the retail lease agreement, insert a term that requires their prior consent and approval for you to be able to assign the lease to another prospective tenant. That said, landlords must not unreasonably deny such a request for assignment on any grounds. The grounds on which assignment may be refused are narrow provided the tenant complies with the procedural requirements of applying for the landlord’s consent. The grounds on which a landlord may deny consent to assign a retail lease include the following:

  • If the prospective assignee is proposing to use the premises in a different way to that specified under the original tenant’s permitted use clause;
  • If the prospective assignee is not as financially stable or does not have the same retail experience and skill set; and/or
  • If the tenant, in applying to the landlord to assign the lease, has failed to adhere to the procedural requirements of making such a request to the landlord.

It is important that the procedures for making such a request are strictly followed. If they are followed, the landlord must either deny or accept the request for assignment within 28 days after receiving the request and can only deny the application for the above reasons.

Another reason why following the assignment procedure in the Act is important is that it gives the tenant/ guarantor a right to get statutory releases after the assignment has occurred. Without these statutory releases, you and any guarantor may still be liable for the remaining term of the assigned retail lease if the assignee fails to uphold its obligations to the landlord.

Will I be offered a new lease at the end of my initial term?

Do you have an option to renew your retail shop lease? If so, you will normally be offered a new lease on the terms set out in the option clause of your original lease. If the landlord offers no option, then there is no obligation on the landlord to offer a new retail shop lease and similarly no obligation on the tenant to agree to enter a new retail shop lease.

Under the Act, the landlord must, within 6-12 months of the expiry date, either:

  • Make an offer to renew or extend the term of the retail shop lease under the specific terms identified in the notification, such as rent; or
  • Notify the tenant that no extension or renewal will be offered at the end of the lease.

Once a landlord has formally offered to extend or renew a lease, this offer will stand for at least one month before the landlord can revoke the offer. Additionally, the landlord can extend the period of time that the offer is available to the tenant if more time is necessary for negotiations of the new terms to take place.

Failure of the landlord to notify the tenant of his or her intentions will give the tenant a right to request an extension of the initial term before it expires. Provided this request happens in accordance with the procedural requirements of the Act, the initial lease term will normally be extended under the provisions of the Act for a further period of 6 months from the date on which the landlord gives his or her required notification under the Act.

Continue reading this article below the form
Loading form

Landlord’s Misleading and Deceptive Conduct

If you believe that your landlord has engaged in misleading or deceptive conduct, then he or she may be liable under the provisions of the Act. Neither party that comes under the Act is permitted to ‘engage in conduct which is, in all the circumstances, unconscionable’. In addition, the Act demands that parties to a retail shop lease avoid engaging in conduct that is, or could be, misleading or deceptive to another party to the retail lease agreement.

Conclusion

If you believe your landlord has engaged in unconscionable conduct during your time as tenant to the retail lease, the right thing to do is to seek legal advice about your concerns. At LegalVision, our team of leasing lawyers have experience both in drafting/ reviewing commercial and retail leases, as well as practical know-how with respect to disputes and litigation.

For an obligation-free fixed-fee quote for advice, contact LegalVision on 1300 544 755.

Register for our free webinars

Demystifying M&A: What Every Business Owner Should Know

Online
Understand the essentials of mergers and acquisitions and protect your business value. Register for our free webinar.
Register Now

Social Media Compliance: Safeguard Your Brand and Avoid Common Pitfalls

Online
Avoid legal pitfalls in social media marketing and safeguard your brand. Register for our free webinar.
Register Now

Building a Strong Startup: Ask a Lawyer and Founder Your Tough Questions

Stone & Chalk Tech Central, Level 1 - 477 Pitt St Haymarket 2000
Join LegalVision and Bluebird at the Spark Festival to ask a lawyer and founder your startup questions. Register now.
Register Now

Construction Industry Update: What To Expect in 2026

Online
Stay ahead of major construction regulatory changes. Register for our free webinar.
Register Now
See more webinars >
Lachlan McKnight

Lachlan McKnight

CEO | View profile

Lachlan is the CEO of LegalVision. He co-founded LegalVision in 2012 with the goal of providing high quality, cost effective legal services at scale to both SMEs and large corporates.

Qualifications: Lachlan has an MBA from INSEAD and is admitted to the Supreme Court of England and Wales and the Supreme Court of New South Wales.

Read all articles by Lachlan

About LegalVision

LegalVision is an innovative commercial law firm that provides businesses with affordable, unlimited and ongoing legal assistance through our membership. We operate in Australia, the United Kingdom and New Zealand.

Learn more

We’re an award-winning law firm

  • Award

    2025 Future of Legal Services Innovation Finalist - Legal Innovation Awards

  • Award

    2025 Employer of Choice - Australasian Lawyer

  • Award

    2024 Law Company of the Year Finalist - The Lawyer Awards

  • Award

    2024 Law Firm of the Year Finalist - Modern Law Private Client Awards

  • Award

    2022 Law Firm of the Year - Australasian Law Awards