Retail Leases – Some tips for Landlords.

This post deals with just a couple of lesser known items. Landlords should take note of the following:

• The prohibition on seeking payment of legal costs in the preparation of the lease;
• The prohibition on seeking payment of land tax. If collected, the Tenant could seek the return as an overpayment;
• The requirement for a Landlord to provide a Tenant with a formal notice of the last date the Tenant has to exercise the option for a further term (if applicable) and the consequences of failing to provide the notice (i.e. the right for the Tenant to exercise the option extends for a period of 6 months from the date the notice is provided (even if the term has expired)).
• In the case where there are no further terms in the lease, the requirement for a Landlord (at least 6 months but not more than 12 months prior to the expiry of the term) to provide a Tenant with a formal notice of whether it intends to offer a renewal/new lease and on what terms or whether the lease will end at the expiry of the term. If a notice is not provided, the lease will continue for a period of 6 months after the notice is given (even though the expiry of the term is noted in the lease). Any offer to renew is irrevocable for a period of 60 days.
• A Tenant is entitled to a 5 year minimum term, even if the lease says otherwise. The only way a term of less than 5 years is enforceable is if the Tenant obtains a 5 year waiver certificate from the Small Business Commissioner.
• Section 47 of the Retail Leases Act 2003 requires Landlords to provide a statement of outgoings to Tenants annually and in some circumstances this statement must be accompanied by an audited report.

Obviously, there are many other important rights and obligations set out in the Retail Leases Act 2003 and the relevant lease document and it is important that Landlords and Tenants know what their obligations and rights are.

For more information please contact Phillip Leaman or a member of our Property Law Team.