Posted by: Tom Wood | Date: 4 April 2011
One of the most common questions I get asked and one of the biggest issues in retail leasing is what are the timing requirements under the Retail Shop Leases Act. The Retail Shop Leases Act places strict time requirements on parties who are or have entered into a retail shop lease in Queensland and failure to comply can have a devastating effect on either party. This post sets out the different requirements under specific headings.
The Retail Shop Leases Act requires a Lessor to provide a disclosure statement and a copy of the draft lease to a prospective Lessee of a retail shop at least seven (7) days before the lease is entered into.
The term “enters into a lease” mean the earlier of:
If a Lessor fails to provide this disclosure the Lessee may terminate the lease within six (6) months after the Lessee enters into the lease. Further the Lessor may be liable to pay damages to the Lessee.
The Retail Shop Leases Act also requires the proposed Lessee to provide a Lessee disclosure statement, financial advice certificate and legal advice certificate. These forms are generally required to ensure proposed Lessee has received appropriate professional advice.
Similar disclosure obligations are imposed on the Lessor upon the assignment of a lease.
Upon an assignment:
Unlike when a new lease is entered into there are no rights for a prospective Assignee to terminate the lease if the Lessor fails to provide the disclosure statement.
When the Lessee has given the Lessor full particulars of the proposed assignment and asks the Lessor in writing to consent to it, the Lessor must give a response within one (1) month. Failure to do so results in a retail tenancy dispute.
A dispute will also exist if:
The Act requires a Lessor to remind the lessee of the option to renew despite anything else in the lease which may be to the contrary.
The notice which the Lessor must give is at least 2 months but not longer than 6 months before the option date. The option date is not the date the current term expires but rather is the date stated in the Lease as the date by which the Lessee must exercise the option to renew the Lease if they intend to do so. As an example if the Lease requires the Lessee to give notice at least 3 months before the expiry of the Lease then the option date is at least 2 months and not more than 6 months before that date, that is in affect at least 5 months but not more than 9 months before expiration of the term.
If a Lessor fails to give notice there is a maximum penalty of 40 penalty units which equates to $3,000.00.
If the Lease does not contain any option the Lessor must give written notice that:
The notice period is as follows:
There is no penalty to the Lessor if it fails to give notice. However, if no notice is given, the term of the lease is automatically extended until:
If you require any assistance regarding the Retail Shop Leases Act Qld, please don’t hesitate to contact me.