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WHAT DO YOU NEED TO KNOW ABOUT COMMERCIAL LEASES AND RETAIL SHOP LEASES?

Mon, 1 Apr 2019

WHAT DO YOU NEED TO KNOW ABOUT COMMERCIAL LEASES AND RETAIL SHOP LEASES?

We have many clients based on the Gold Coast and State-wide who are expanding into or starting a commercial enterprise and although it’s an exciting time when you are starting a business and seeking commercial premises, or when you purchase commercial premises and are looking for your first retail tenant, there are some important things to be aware of in relation to Commercial Leases and Retail Shop Leases in Queensland.

It is most certainly not the case that a Commercial Lease or Retail Shop Lease is ‘one size fits all’, and it is vitally important that the document that you sign contains all of the clauses that you need, and that those clauses which are overly onerous, or do not apply are removed.  It is also important that you understand your rights, responsibilities and obligations under the lease before signing it, again to ensure that the lease document accurately reflects the agreement reached between the parties, and that you are fully aware of any issues which could affect your business in the future.

We have written an article on the types of terms and conditions that are usually covered in a lease, which you can read here.

The last thing either a lessee or a lessor wants is to be stuck in a longterm lease containing unforgiving clauses, or terms and conditions that do not suit them.

Generally speaking, there are two broad categories of ‘commercial leases’ to be aware of in Queensland, and if you are starting a business or purchasing commercial premises you will either be dealing with a general commercial lease or a Retail Shop Lease (depending on the type of business or the premises location).

Retail Shop Leases differ from commercial leases in several ways. 

Commercial leases tend to be associated with commercial property designed to cater for specific business purposes, such as offices, warehouses or industrial areas.  Further, it is also important to be aware that commercial leases tend to offer less legal protection for parties as they are not specifically protected by Statute.

Retail Shop Leases on the other hand are generally those within ‘retail shopping centres’ or which are wholly/predominantly used for the carrying on of a retail business identified in the Retail Shop Leases Act 1994 (‘RSLA’)

In contrast to commercial leases, the RSLA stipulates various requirements, including but not limited to disclosure requirements, minimum lease standards, rent reviews, core trading hours, lease assignment protocol and dispute resolution processes in respect of Retail Shop Leases.

While it is important to seek independent and specific legal advice if you are considering entering into either a commercial lease or a Retail Shop Lease, if you are contemplating entering into a Retail Shop Lease you should be aware that there are strict disclosure obligations which apply.

In this respect, both the lessor/landlord and lessee/tenant must comply with the strict disclosure obligations under the RSLA, which include, but are not limited to:

- The Landlord must provide the Tenant with a completed Disclosure Statement, together with a draft copy of the lease, at least 7 days prior to the Tenant signing the lease;

- The Tenant must likewise provide the Landlord with a Disclosure Statement prior to entry into the lease;

- Tenants must obtain a Legal Advice Report from a Lawyer and a Financial Advice report from an Accountant and provide same to the Landlord

We reiterate that a failure to comply with certain obligations under the RSLA can result in a party being able to terminate the lease, or suffer a financial detriment.

Navigation of the RSLA can be complex and time consuming, and entry into a Commercial Lease can be just as daunting. This is why we always recommend that you obtain specific and tailored legal advice from one of our experienced Commercial Lawyers, prior to signing any lease documentation. 

For your convenience, our Commercial team are on hand to assist you from the beginning of the process right through until completion, so please feel free to contact our Gold Coast office today on 07 5563 8970 to discuss your matter.

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