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RETAIL TENANCIES REFORM ACT

RETAIL TENANCIES REFORM ACT

The Retail Tenancy Reform Act covers many leases of premises in Victoria. There are some exceptions but they are narrow.

The Retail Tenancy Reform Act defines a 'retail premises' as premises used "wholly or predominantly for the carrying on of a business involving the sale or hire of goods by retail or retail provision of services.

The Retail Tenancy Reform Act defines a "retail shopping centre" as" a cluster of premises five or more of which are retail premises and all of which have, or if leased would have, a common head landlord, but does not include a building with more than one storey except in relation to each storey of the building on which is situated a cluster of premises in respect of which each of the above criteria apply.

The Retail Tenancy Reform 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. 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 form of Disclosure Statement must be substantially in accord with the Disclosure Statement contained in the schedule.

2. Unless the landlord gives you the Disclosure Statement at least 7 days before the lease is signed or you take occupation of the premises you may be able to terminate the lease at any time until seven days after the landlord supplies the Disclosure Statement. If the tenant is not given a copy of the lease at least seven days before entering into the lease or the Disclosure Statement contains false or misleading information the tenant may terminate the lease within 28 days after receiving the lease and Disclosure Statement. If the Disclosure Statement omits any important matters or is deficient in some way you may be entitled to claim compensation from the landlord.

3. The landlord must give a copy of the lease signed by the landlord and the tenant to the tenant within 28 days after the tenant has signed the lease. Failure to do so entitles the tenant to terminate the lease within 42 days after being given a copy of the lease or entering into the lease whichever is the latter.

4. The tenant is entitled to a statutory option for a further term where the initial term of the lease is less than five years provided that such option does not exist where the tenant has previously held a retail tenancy or where the landlord occupies the retail premises pursuant to a head lease which will expire prior to the statutory option term.

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.

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 in the Disclosure Statement before entering into the lease. In some cases the landlord may even have to provide you with an auditor's statement for outgoings incurred by the landlord particularly in the case of a retail shopping centre.

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 not released from any future obligations in the lease for the current term.

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.

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

The rights under the Retail Tenancy Reform Act are valuable and numerous. Sometimes they will depend upon the circumstances of the lease or the terms of the lease.

The obligations mentioned here are not complete or exhaustive. If in doubt you should consult a lawyer.

FURTHER INFORMATION 

This Information Outline is provided courtesy of McKean & Park Lawyers & Consultants who are experienced in this area of law. They are located at 405 Little Bourke Street MELBOURNE VIC 3000 or call them on (03) 9670 8822 if you would like more information on the legal topic, or you wish to obtain formal advice regarding your situation. 

McKean & Park was established in 1863 by James McKean and thrives today with 20 professionals specifically in all major areas of practice including Workplace Relations and Anti-Discrimination Law. The firm is proud of the fact that many of its Lawyers are accredited specialists approved by the Law Institute of Victoria. McKean & Park is committed to providing clients with comprehensive and innovative legal services delivered promptly in a professional and cost effective way.

 

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