Retail and Commercial Leasing

Services for Landlords

●       Lease negotiation
●       Lease documentation
●       Disclosure requirements
●       Compliance with Retail Leases Act 2003
●       Payment of outgoings
●       Responsibility for repairs and maintenance
●       Options and Renewals
●       Security deposits, bonds, or bank guarantees
●       Termination and obligations at the end of the lease
●       Defaults and breaches
●       Lease and payment disputes

Services for Tenants

We provide legal advice and support on:

●       The nature of the lease: It is vital to understand whether you are signing a retail lease or commercial lease as your rights and obligations may greatly differ under both
●       Negotiating or renegotiating the terms of the lease
●       Lease documentation. For example, the landlord is required to provide you with certain documents at least 14 days prior to signing the lease, under the Retail Leases Act, 2003
●       Outgoings, which may include expenses like council rates, taxes, utility bills, etc that may increase your overhead costs
●       Responsibility for repairs and maintenance
●       Rent review
●       Buying leased goods and equipment.
●       The term of the lease and option to renew
●       Mortgages on the leased property
●       Transfers, assignments, and subleasing
●       Insurance
●       Termination and obligations at the end of the lease

We also represent Landlords and tenants you in legal proceedings arising out of any lease disputes.

Commercial vs Retail Lease

Commercial leases can be freely negotiated subject to general principles of contract law and small business legislation. As an example, a clause which is unfair or vague may be declared void or unenforceable. Commercial leases may also be subject to property legislation prevailing in different jurisdictions in Australia, which govern registration, forfeiture of lease, and other rights of parties. Currently there is no law regulating commercial leases in Victoria. Therefore, covenants which are generally applicable to leases outside Victoria may not be applicable or be excluded or be replaced with more detailed clauses.

The difference between a retail and commercial lease is the ability to contract out of covenants and obligations which are mandatory if the premises falls under retail legislation like the Retail Leases Act 2003.

The distinction between a retail and commercial lease is often blurred and the applicable test is based mostly on the location of the property. If a business is located in a premises that has retail indicia elements then the premises will be covered by retail legislation, therefore the provisions of the Act will be applicable regardless of the agreement between the landlord and the tenant.

Recently, Courts have applied the test of the end consumer of the goods or services to determine the applicability of retail legislation. In a recent case, the tenant was a cold storage business providing storage in freezer warehouse for a fee. It was held that the service fell within the meaning of a retail service as the ultimate end-consumer was being provided a service. As a general rule if the premises are within a shopping centre (i.e. a cluster of five or more shops) and predominantly used for providing goods and services to the end consumer, then the premises is likely to fall within retail legislation which imposes certain duties like:

Disclosure of Information by the landlord

Obligations are imposed on the landlord to provide tenants with a disclosure statement before entering into a lease. A disclosure statement contains a summary of the terms of the lease and obligations to be met by the tenant.

Unconscionable Conduct and Misleading or Deceptive Conduct:

Retail tenants also receive various protection against these practices under the Retail Leases Act. Certain penalties are imposed if provisions are not followed.

The lease is generally for a minimum of 5 years

Unless the tenant waives this right.

The landlord cannot claim expenses or legal costs for negotiating or preparation of the lease deed or obtaining consent from mortgagee.

1.      Landlords can recover costs of essential safety measures from tenants: Landlords can now recover expenses relating to the installation of essential safety measures. These measures may also be installed by the tenant on behalf of the landlord. The landlord is still obligated to carry out necessary repairs related to structural integrity of the building. The lease may specify the obligations and by whom they may be met.

2.      Disclosure obligations: Disclosure statements must now be provided at least 14 days prior to the signing of the lease. If the landlord fails to do so the term of the lease is taken to commence 14 days after the disclosure statement was provided to the tenant. On renewal, the tenant must be informed if there are any changes in the lease and these changes should be mentioned in the disclosure statement.

3.      Security deposits should be returned by the landlord within 30 days: If the tenant has performed all obligations then the landlord is required to return the security deposits within 30 days after the lease term expires.

4.      Landlord’s obligations regarding disclosures when tenant exercises options: thr landlord must provide information regarding the last date the tenant must exercise the right to renew, the rent payable for the next 12 months  and the availability of a rent review. If this renewal notice is not issued the date to exercise the renewal option is extended by three months.

5.      Early rent reviews: If a lease provides for market review of rent then the tenant may request an  early rent review on commencement of the next lease term. This request must be made within 28 days of receiving the renewal notice.