Scenario
Fred and Jane are looking to buy a new small business and as part of this process they have found appropriate premises that they wish to lease. After discussions with the real estate agent the agent handed them a Retail Lease. They thoughtfully take the Retail Lease to their business lawyer for advice.
Guidance
The role of the business lawyer is to ensure Fred and Jane execute the best lease possible for their circumstances and ensure that Fred and Jane understand the terms, conditions and effects of that lease.
A Retail Lease is a standard form, statutory commercial lease. It is NSW jurisdiction only. They are governed by the Retail Leases Act 1994 (NSW) and the Retail Leases Amendment Act 2005 (NSW) (collectively “the Act”).
A Retail Lease operates for tenants of shopping centres and for leases of premises in area less than 1,000 square metres and are listed as one of the (many) retail businesses in accordance with the Act.
The Act provides that tenants are entitled to a term of not less than 5 years, though this may be reduced by consent of the tenant. The Act also provides for Disclosure Statements as part of the Retail Lease. The disclosure Statements are designed to ensure the landlord discloses all relevant information concerning the lease together with providing both parties (landlord and tenant) with an opportunity to disclose other matters such as promises or representations that might be made during negotiation of the lease terms. The Disclosure Statements are therefore crucial to get right from the start particularly for the protection of a tenant where the landlord may have made such promises. There are strict timing issues for the Disclosure statements to be completed, signed and forwarded to the other party.
The Act provides for particular procedures in relation to pre-lease information brochures, details of estimated outgoings of building maintenance etc, costs before fit-out, intended disturbance disclosure (ie. renovations affecting business etc), relocation, advertising, market rent review calculations, dispute resolution, retail lease bond scheme, assignment of lease to a new tenant and note that inspection of premises reports are extremely useful.
The negotiation of lease terms are generally made by the tenant or the landlord or via an agent however a business lawyer may assist a client in this regard focusing on the clients individual circumstances.
Further information: Blackwell Short Lawyers, Retail Tenancy Unit of Dept. State & Regional Development, Administrative Decisions Tribunal, Australian Retailers Association, Property Council of Australia, Real Estate Institute of NSW, Shopping Centre Council of Australia