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Commercial lease

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Hankinf View Drop Down
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Joined: 04/February/2012
Location: Australia
Posts: 2
  Quote Hankinf Quote  Post ReplyReply Direct Link To This Post Topic: Commercial lease
    Posted: 04/February/2012 at 22:00
I have started a new retail business, signed a standard tenancy lease and now that we have been operating for nearly 2 months we have only made sales to cover 30% of the monthly rent.

We feel that the landlord is being unfair because our shop is in a new market complex where we were told to expect over 70,000 visitors per week and up to 6.5m people p/a. The problem is only 60% of the complex has been leased, 40% actually open and trading, and shoppers are scoffing at the fact the place looks like it is still under construction.

The owners won't give any consideration to changes to the lease such as rent free or reduced rent and is now causing financial stress and hardship with the ourselves and other tenants. A couple have been hospitalised due to stress.

Is their a formal letter I can have drawn up that will override the current lease agreement where I can offer to give a 4 week notice of cessation of lease or am I bound for the next 3 years?

Any direction will be appreciated.

MartinO View Drop Down
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Joined: 02/March/2009
Location: Australia
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  Quote MartinO Quote  Post ReplyReply Direct Link To This Post Posted: 04/February/2012 at 23:08
Sorry but if you have signed a lease you are liable to pay the rent stated in that lease. Any clauses regarding reduced rent if expected customer numbers are not met, should have been sorted out before signing.

However you do have a case for terminating the lease if the figures given to you beforehand are not what you have actually experienced. But you are on the back foot because this was not already attended to.

It's called due diligence, and perhaps you have been a bit remiss in not ensuring such clauses were in place.

Go and see you solicitor before the owners start proceedings to foreclose on you. If this happens you could be found liable for the full rent for the full term of the lease contract. Act right away.
I am NOT a lawyer. Anything said is NOT legal advice.

Please post your legal questions in a forum rather than sending a PM. Thanks.

AsiaOilDude View Drop Down
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  Quote AsiaOilDude Quote  Post ReplyReply Direct Link To This Post Posted: 04/February/2012 at 23:43
What entity (name) is the lease in? Pty Ltd or sole trader?
Not legal advice. Personal opinion only. Seek legal advice from qualified personnel only.

khon View Drop Down
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  Quote khon Quote  Post ReplyReply Direct Link To This Post Posted: 04/February/2012 at 23:54
Most commercial leases also require the director/s of the company as guarantor/s. If sole trader, are you a guarantor of the lease?
Personal opinion only, should not take it as legal advice

Hankinf View Drop Down
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  Quote Hankinf Quote  Post ReplyReply Direct Link To This Post Posted: 05/February/2012 at 21:11
Thanks All,

I have signed the lease as a sole trader.

I am aware of my legal obligations in relation to the lease, I was just curious to know if there is a courteous way of exiting the lease on good terms.

Atikin View Drop Down
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Joined: 12/June/2007
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  Quote Atikin Quote  Post ReplyReply Direct Link To This Post Posted: 17/February/2012 at 15:11
What state are you in? This is from the RLA NSW but there most likely will be a similar clause in the act for your state.

RETAIL LEASES ACT 1994 - SECT 10
Right to compensation for pre-lease misrepresentations
10 Right to compensation for pre-lease misrepresentations

(1) A party to a retail shop lease is liable to pay another party to the lease ( "the injured party") reasonable compensation for damage suffered by the injured party that is attributable to the injured party’s entering into the lease as a result of a false or misleading statement or representation made by the party, or any person acting under the party’s authority, with knowledge that it was false or misleading.
(2) The giving of a lessor’s disclosure statement to a prospective lessee under a retail shop lease is considered to be the making of a representation by the lessor to the lessee as to the information in the disclosure statement.
(2A) The making of a representation by a prospective lessee in a lessee’s disclosure statement given to a prospective lessor under a retail shop lease that the prospective lessee has sought independent advice, or as to statements or representations relied on by the prospective lessee in entering the lease, is considered to be the making of a representation by a lessee to the lessor.
(3) This section extends to apply to a statement or representation made before the commencement of this section.

Argue that a misrepresentation has been made to you in regard to the level of customers in the shopping centre and that 'reasonable compensation' is 70% of the rent until such time as the centre is complete and the shopper nos. have increased to the indicated level. Threaten to take them to the CTTT and state you have received legal advice that you would most likely be entitled to compensation for the misrepresentation.

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