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RETAIL LEASES ACT

RETAIL LEASES ACT

The Retail Leases Act covers most leases of shops in New South Wales. There are some exceptions but they are narrow.

The Retail Leases Act defines a 'retail shop' as premises used "wholly or predominantly for the carrying on of one or more businesses specified in Schedule 1 (whether or not in a retail shopping centre); or are used for the carrying on of any business (whether or not specified in schedule 1) in a retail shopping centre."

The businesses specified in Schedule 1 of the Retail Leases Act are fairly exhaustive and have been reproduced at the end of this Document 5.

The Retail Leases Act defines a "retail shopping centre" as" a cluster of premises used wholly or predominantly for the carrying on of one or more of the businesses specified in Schedule 1; the premises are all owned by the same person, or have (or would if leased have) the same lessor or the same head lessor or comprise lots within a single Strata Scheme; are located in 1 or 2 buildings either adjoining or separated only by common areas or other areas owned by the owner of the retail shops; or a cluster of premises promoted as a shopping centre, shopping mall, shopping court or shopping arcade."

The Retail Leases Act does not define a "shop" but as this word is included in many of the businesses listed in Schedule 1 of the Act it needs to be considered. A shop is usually a room, number of rooms or building used for the retail sale of particular goods, items, commodities or services. Retail usually means that goods are sold not for resale and most often in a small quantities at a time. Accordingly, if you suspect premises are a shop, they most probably are.

The Retail Leases Act imposes numerous obligations on the landlord before and during a lease. If the landlord fails to comply with the Act you may be able to end the lease early or to claim compensation from the landlord. The Act is long and detailed. Some of the important obligations on the landlord are:

1. The landlord must have a draft lease available for inspection before the shop is advertised for lease or you are offered a lease.

2. At least 7 days before the lease is entered into the landlord must give you a Disclosure Statement. A Disclosure Statement summarises the terms of the lease. The Disclosure Statement includes information given by you to the landlord known as a Lessee's Disclosure Statement.

Unless the landlord gives you the Disclosure Statement at least 7 days before the lease is signed or you take occupation of the shop you may be able to terminate the lease at any time during the first 6 months. If the Disclosure Statements omits any important matters or is deficient in some way you may be entitled to claim compensation from the landlord.

3. Leases must be for a minimum of 5 years including options unless you have a solicitor provide you with a certificate under Section 16(3) of the Retail Leases Act. If the certificate is not provided a lease for less than 5 years it is automatically extended to 5 years.

4. There are a number of restrictions on rent reviews. For example:

A lease may not contain a clause which prevents the rent from going down eg on a market review, or if the Consumer Price Index fell which would reduce the rent below what was previously payable.

The landlord may not charge you the higher of 2 alternative methods of rent review eg a review to the higher of market or CPI is illegal.

5. There are substantial obligations on the landlord if you are required to pay outgoings under the lease. Generally, the landlord must provide you with an estimate of outgoings before entering into the lease and during each 6 month period of the lease and an annual statement of outgoings actually incurred. In some cases the landlord may even have to provide you with an auditor's statement.

6. The landlord may not end the lease for your failure to reach turnover targets.

7. If you wish to assign the lease you must make application to the landlord who must consider the request within 42 days. There are limited grounds on which the landlord can refuse to assign. If any assignment of the lease proceeds, you and any guarantors are released from any future obligations in the lease.

8. 6 to 12 months before the end of the lease, if there is no option left, the landlord must tell you whether he will grant you a new lease or require you to vacate at the end of the lease. If the landlord fails to give you this notice the lease will be extended to a date being 6 months after the required notice is given, but only if you request notice in writing from the landlord before the end of the lease.

During an extension of the lease you may give 1 months notice to end the lease.

The rights under the Retail Leases Act are valuable and numerous. Sometimes they will depend upon the circumstances of the lease. The obligations mentioned here are not complete or exhaustive. If in doubt you should consult a lawyer.

LIST OF BUSINESSES SET OUT IN SCHEDULE 1 OF THE RETAIL LEASES ACT

Antique shops; art galleries; art supplies shops; arts and crafts shops; barbeque equipment shops; barbers; beauticians; beauty therapists; beauty shops; beach wear shops; beer wine and spirit shops (except where goods are for consumption on the premises); bicycle shops; bicycle accessories shops; biscuit bar shops; bookshops; boot and shoe repairers; bridal wear sales and hire shops; building supplies shops; business machines and equipment shops; butcher shops; cake shops; camping equipment shops; cards shops; carpet shops; cigarette shops; clock shops; coin and coin collection shops; confectionery shops; convenience food shops; cookie shops; copper fitting shops; cosmetic shops; costumes and formal wear hire shops; curtain shops; delicatessen shops; department stores; dinnerware shops; disposal shops; drapery shops; dry cleaners; duty free shops; electrical appliance shops; electronic equipment and supplies shops; engravers; equestrian wear shops; equipment hire shops; fast food shops; fast photo processors; floor covering shops; florist shops; flower shops; fruit and vegetable shops; fruit juice shops; furniture shops; games and hobbies shops; general stores; gift shops; gift wrapping shops; grocery shops; greengrocer shops; haberdashery shops; hairdressers; hardware shops; health food shops; hearing aid shops; hot bread kitchen shops; hot water system shops; household appliances fixtures and fittings shops; ice cream shops; interior decoration shops; jewellery shops; key cutting shops; kitchenware shops; leather good shops; lighting shops; linen shops; lingerie shops; lottery agencies; manchester shops; martial arts supplies shops; mixed business shops; motor vehicle and motor cycle accessories shops (excluding tyre shops and batteries shops); music shops; newsagency shops; nick-nack shops; nut bar shops; optometrists; organ shops; paint and paper shops; pastry shops; pet shops; pharmacy shops; photographic equipment and supplies shops; picture frame shops; plumbing supplies shops; pools and spa shops; poultry shops (whether fresh or frozen or both); precious stone shops; print and poster shops; restaurants, cafeterias; coffee lounges and other eating places; rock shops; rubber stamp supply shops; seafood shops; second hand goods shops; shoe shops; shops selling or engaged in providing any 1 or more of the following goods and services in relation to men and boys: accessories, caps, clothing, clothing alterations, sunshades; shops selling or engaged in providing any 1 or more of the following goods and services in relation to women, girls and infants: accessories, babywear, bags, caps, clothing, clothing alterations, sunshades; shops selling any 1 or more of the following goods: cassettes, musical instruments, prerecorded tapes, records; silverware shops, sleepwear shops; smallgoods shops; snack bars; soft drink shops; soft furnishing shops; souvenir shops; sporting goods shops; stamps and stamp collection shops (whether purchase sale or both) stationery shops; supermarkets; surfboard shops; surfing accessories shops; takeaway food shops; television, video equipment and other household appliances hire shops; tobacconists shops; toy shops; umbrella shops; variety shops; video tape and prerecorded music libraries; vitamin shops; wall decoration shops; watch shops; writing material shops; and any other business from time to time prescribed by the regulations.

FURTHER INFORMATION

This Information Outline is provided courtesy of Yandell Wright Stell who are experienced in this area of law. They are located at Level 5, 139 Macquarie Street SYDNEY NSW 2000 or call them on (02) 9252-2278 if you would like more information on this legal topic, or you wish to obtain formal advice regarding your situation.

Yandell Wright Stell Lawyers are a commercial law firm also providing advice on immigration to Australia by experienced Solicitors and migration agents. We are fully up-to-date with visas policy requirements and legislation changes. Your application will be professionally prepared and submitted with the Department of Immigration, Multicultural and Indigenous Affairs or overseas mission. Further, we will represent you at all stages of your application up to visa approval and endorsement in your passport. It is our mission to fully understand our client's needs and provide excellence in our service.

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