Special rules apply to retail leases. Expert drafting is essential and our Retail leasing lawyers can assist with all your requirements.
The Retail Shop Lease Act 1994 (Qld) adds complexities when leasing retail premises. Our retail leasing lawyers ensure that your rights and obligations are clearly understood. A “retail shop” is a reference to premises of less than 1000 m² floor area used predominantly for one of the numerous retail business types described in the Retail Shop Leases Regulation.
It can also include premises that aren’t retail in nature but are situated in a “retail shopping centre” comprised by at least five tenancies, but only if more than 25% of the floor space on the same floor level is utilised for retail.
As in all commercial documentation, future unforeseen contingencies must be guarded against. Tenant default, unusual events, damage to the centre, insolvency of the landlord or the tenant are all events that require legal foresight that protects your rights and gives you practical solutions. Read our retail leases 101 – what you need to know before getting started.
A dispute between a retail or commercial landlord and its tenant can arise from many circumstances. Experienced business litigation lawyers are vital to expertly assess and prepare the arguments on behalf of a lessor or a lessee to determine if leasing disputes is required. Find out more
Negotiating a commercially viable lease requires you to know and understand the key terms and conditions contained in the lease clauses. – ATO
Lease Disputes: Commercial Tenant + Landlord
Looking to get an assessment of your prospects of success in a lease dispute? Try our interactive case assessment tool for an indication of in whose favour the dispute is likely to resolve.
If you are a tenant, rental costs are a significant proportion of overheads and it is critical that you engage a lawyer to review your lease before entering into a long-term relationship that could have negative long-term consequences for your business.
We will review and discuss your retail or commercial lease so that you can be confident that there are no “hidden clauses” that will later be detrimental to your business. We can also advise on your obligations where necessary to ensure that you comply with the Retail Shop Leases Act 1994.
We can assist with the entire range of services, including:
Negotiation of lease terms (including rent, assignment options, duration, options for exit and renewal);
Make-good and the condition of the premises when the tenancy is terminated;
Early termination of the lease;
Maintenance liability and associated costs;
Fitting out incentives;
Methods of dispute resolution;
Ownership of fittings and fixed equipment that you install;
Preparation and review of commercial and retail leases;
Renewal of leases, and lease assignments;
Responsibility for any refurbishments, additions, changes to area let;
Advice concerning security bonds and lease guarantees.
Issues to consider in every lease
Leased area & rent
A lease does not need to specify an accurate floor area unless the lease is intended to be registered.
Most leases will, however, specify a floor area. If space has only recently been constructed or remodelled, the Letter of Intent may specify an estimated area that is “subject to survey”. It may also specify that the rent is to be calculated by reference to the survey floor area and a specified annual rent per square metre.
In those cases, the survey will proceed before the lease is lodged for registration so the floor area and rent details can be inserted prior to lodgement.
Tenants may or be asked to pay the cost of the survey.
Most often leases are for 3 years or for 5 years. Frequently they contain one or more options for the same number of years.
Once a tenant signs up to April binding lease for a particular term, it is obliged to pay rent for the entire term regardless of whether or not it continues in occupation.
Landlords are entitled to expect rental growth and this may be accomplished by allowing for annual rent increases (usually on the anniversary of the commencement date) either in accordance with CPI increases, a fixed percentage or a “market review”.
Some leases specify that the tenant must also pay a proportion of outgoings for the building in which the tenancy is located. Usually, the share of outgoings is the proportion which the floor area of the leased premises bears to the total lettable floor area of the location.
Most offers the lease must be accompanied by a deposit which is credited towards the lessee’s rent obligations if the formal lease is negotiated and signed quickly or if not is paid to the less the or to defray its legal expenses.
A landlord may also require a bank guarantee to be provided to cover 3 months or 6 months of rent in the event of default. This allows the landlord to go to the tenant’s bank and collect cash to compensate it for the default, up to the maximum value of the guarantee.
Lessees who are “small businesses” with up to a maximum 20 staff including casuals, will likely attract the “unfair terms” prohibition mandated in the Australian Consumer Law if the total rent for the period of lease does not exceed $1 million.
The most common way of entering into retail or commercial leases is firstly by way of “Letter of Intent” which sets out the fundamental commercial terms: start date, term, estimated floor area, names of lessor and lessee, annual rent, the proportion of outgoings, options, read escalation mechanisms and guarantee requirements.
The Letter of Intent is usually in the form of an offer by the prospective lessee to accept a lease on the terms stated.
Because the formal lease contains the numerous obligations etc that can’t be included, a countersigned Letter of Intent is usually not a final document. A binding Letter of Intent is also possible if preferred.
The Retail Shop Lease Act 1994 (Qld) adds complexities when leasing retail premises. Our retail leasing lawyers ensure that your rights and obligations are clearly understood. A “retail shop” is a reference to premises of less than 1000 m² floor area used predominantly for one of the numerous retail business types described in the Retail Shop Leases Regulation.