Tenants guide to commercial retail leases in NSW

In NSW retail commercial leasing is covered by the Retail Leases Act 1994. The Act provides for minimum standards which must be followed in commercial leasing relationships. Here is LegalVision’s guide to help you understand you and your landlord’s obligations in NSW retail leasing.

Disclosure statement

Under NSW law, a landlord is required to give a disclosure statement no later than seven days before the lease begins. If you are not given a disclosure statement you can terminate the lease.  However, it is best to seek advice from a leasing lawyer before terminating a lease. If the premises are in a shopping centre, the disclosure statement must contain:

• Annual sales information about the shopping centre
• Information about how many customers the shopping centre attracts
• Information about leases for major tenants in the shopping centre, when they come to an end Read the Landlord’s Disclosure Statement closely.  It should include any agreements or promises agreed to during lease negotiations. If the disclosure statement or the commercial lease doesn’t make sense you should consider getting legal advice from a leasing lawyer or online legal advice.

Tenant’s disclosure statement

The tenant is also required to produce a disclosure statement.  This disclosure statement must state whether:

• You have received the landlord’s disclosure statement
• You have a copy of the draft lease
• You have received any professional advice about the lease
• The landlord has made any other promises or representations to you which are not in the lease

What is the minimum period for a retail lease?

The minimum period is five years and this includes any options to renew.  If you want a shorter lease period you need to give the landlord a special notice which is called a section 16 certificate.  You will need to have this signed by a leasing or contract lawyer or conveyancer.

Rent Variation

The lease must specify how rent will be varied and how often.  If the lease states that any variations will be made at market rates, then the lease should also state the process for appointing a market valuer.  If parties cannot agree on this then the valuer will be appointed by the NSW Civil and Administrative Tribunal (NCAT).

The Bond

If parties agree that the landlord will be given a cash bond then the landlord must deposit this with the NSW Government’s retail bond scheme.

What if a landlord disrupts my business?

Under NSW law, a landlord is required to take all reasonable steps to prevent causing a disruption to your business.  You may be eligible for compensation if the landlord disrupts your business. If the landlord wants to do any type of work which may disrupt your business they must give you two months’ notice, unless it is an emergency.

Damage and repairs

Check the lease to make sure all possible situations involving damage and repairs are covered. If your shop is damaged you are required to tell landlord in writing and that you want it fixed.  If a landlord does not respond in a reasonable time frame then you may be able to apply for compensation. To speak with a leasing lawyer, contact LegalVision on 1300 544 755.