Retail Leasing - Things You Need to Know

Is my lease a retail lease?

There is legislation in Queensland that regulates the leasing of retail premises, Retail Shop Leases Act 2009 (Qld) (“RSLA”). The RSLA affords lessee’s additional protections and was introduced to address the perceived imbalance of negotiating power between landlords and tenants by introducing minimum standards for retail leases.

Generally, a retail lease is a lease of a premises where the permitted use is the sale of goods or services or the premises is located within a retail shopping centre.

Signed Lease

Within 30 days of the parties signing a retail lease, the landlord must give the tenant either an original copy or a certified copy of the fully signed lease.

Notice of option to renew

Where a retail lease contains an option, the landlord must at least 2 months but not longer than 6 months before the final date on which the tenant may exercise the option (“option date”) give the tenant a notice of the option date. The option date will be governed by the terms of the specific retail lease.

Disclosure obligations on renewal of lease

Pursuant to section 21E of the RSLA, the landlord must give the tenant a current disclosure statement within 7 days of the landlord receiving a notice from the tenant that it is exercising its option. Upon receipt of the current disclosure statement, the tenant then has 14 days to withdraw its notice exercising the option.

If a landlord fails to give a tenant a current disclosure statement in accordance with section 21E of the RSLA or such statement is a defective statement, the tenant may terminate the lease within 6 months after the tenant enters into the retail lease.

Renewal of retail lease if no option

If a retail lease does not include an option to renew, the landlord must by written notice to the tenant:

  • offer a renewal or extension of the lease; or
  • that it does not intend to renew or extend the lease

this offer is open for acceptance to the tenant for at least 1 month.

If the landlord fails to give this notice, and unless the tenant otherwise terminates the lease, the lease extended for 6 months after the landlord does give the notice.

The notice required to be given by the landlord must be given as follows:

  • for a lease of not more than 1 year—at least 3 months, but not longer than 6 months, before the lease is to end; or
  • for a lease of more than 1 year—at least 6 months, but not longer than 1 year, before the lease is to end.

Release of assignor and guarantor

If a tenant, with the consent of the landlord and in accordance with the RSLA, assigns the retail lease then the previous tenant and guarantor a released from any future liability under the lease.

Ratchet clause

A ratchet clause in a retail lease prohibiting the decrease of rent under a review is prohibited. However, where a tenant is a major tenant, and the tenant gives notice then such clause will not be void.

Costs not recoverable from the tenant

A landlord is not allowed to pass on legal costs it has incurred to a tenant in respect of:

  • the preparing, renewing or extending the lease;
  • obtaining the landlord’s mortgagee’s consent to the lease;
  • costs incurred in complying with the RSLA.

However, if a tenant requests a retail lease to be prepared and then it does not proceed, then the landlord may recover the costs of preparation of the retail lease from the tenant.

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