The Retail Shop Leases Act 1994 (Qld) (Act) was enacted to promote efficiency and equity in the conduct of certain retail businesses. It sets out to achieve this by mandating minimum standards for retail shop leases.
A retail shop lease exists where the premises are used wholly or predominately for carrying on a retail business. A retail business includes any of the businesses listed in the Regulation to the Act and may also include a combination of the businesses listed. Some of the businesses listed include bakeries, cafes, hardware stores and butchers. Schedule 1 of the Regulation to the Act sets out a comprehensive list which should be referred to if in doubt of the retail status of a particular business. The wholesale of goods is specifically excluded from the definition of a retail business.
A retail shop also exists if it is situated in a retail shopping centre. A retail shopping centre exists if 5 or more of the premises within the centre are used wholly or predominately for carrying on retail businesses.
Local Governments are not exempt from compliance with the Act. However, exemptions are available if, for example:
- The floor area of the leased premises is more than 1000 square metres;
- The lessee of the lease is acting as the lessor’s agent;
- The lease is of a temporary retail stall;
- It is a lease of an automatic teller machine or vending machine etc;
- The leased premises are located in a retail shopping centre and the leased premises are not used wholly or predominately for carrying on a retail business and the floor area on which retail premises are conducted is 25% or less than the total lettable area.
Unless any exemptions in the Act apply a local government must:
- Prepare and issue a Lessor Disclosure Statement to the lessee along with the draft lease at least 7 days before the lease is entered into;
- Ensure the lease meets the minimum standards as set out in the Act, including the passing on of certain costs to the lessee. For example, a lessor cannot pass on the costs to prepare a lease to a lessee;
- Once the lease is signed the lessor must provide a certified copy of it to the lessee.
Penalties are applicable if a local government, in its capacity as a lessor, does not comply with the Act. Lessee’s may also be able to get out of leases if the requirements of the Act are not complied with.
Lessee’s have reciprocal disclosure obligations to a lessor. A local government should ensure a lessee provides these. They stand as good evidence to ensure that a lessee has received legal and financial advice about the lease.
If your Council needs help to comply with these obligations, call our team today.