Proposed Retail Shop Lease Amendments – Lessor Disclosure Statement

View All Articles

The Retail Shop Leases Amendment Bill 2015 (Qld) (the Bill) was introduced into Parliament on 13 October 2015. The Bill has been drafted in response to a statutory review of the Retail Shop Leases Act 1994 (Qld) (the Act) and is a replacement of a 2014 Bill which lapsed due to the change in Government. In particular, prospective landlords of retail premises should be aware of how the Bill, if passed, will impact on their disclosure obligations to the tenant.

Lease Commencement

The Bill seeks to clarify the previously vague definition of the date that the lease has been entered into. This definition is particularly relevant in relation to the Lessor Disclosure Statement (the Disclosure), which, as with the current Act, must be provided to the prospective lessee at least 7 days before the lease is entered into (the Disclosure Period), otherwise the lessee has a right to terminate the lease at any time within the first 6 months.

The date that a lease is entered into will be the earliest of:-
(a) the date the lease is signed by all parties;
(b) the date the lessee enters into possession of the premises;
(c) the date the lessee first pays rent under the lease (not including a deposit).

Accordingly, landlords should be careful to ensure that they do not allow the tenant to take possession of the premises before the Disclosure Period expires, regardless of whether the landlord has signed the lease yet or not.

Lessor Disclosure Statement

Under the current Act, most tenants are unable to waive the Disclosure Period requirement. This can cause significant issues in relation to timing, particularly where the parties are anxious for the lease to commence. The Bill proposes that a prospective tenant will be able to waive the Disclosure Period requirement provided that:-

(a) The Disclosure is still given before the lease is entered into; and
(b) The tenant’s legal advice report states that they have received advice about the effect of the waiver.

Additional Disclosure

Whilst the above provision seems to be encouraging more flexibility within the Act, the following change seeks to impose further disclosure obligations on a landlord.

Under the Bill, the Disclosure Period would also apply when a tenant exercises its option to renew its lease. If the tenant is not happy with the terms in the Disclosure, they have 14 days to retract their exercise of the option, even if the renewed period has commenced. The tenant may elect to waive its right to this Disclosure entirely, or again, may terminate the lease within 6 months if the Disclosure is not received. Compensation may also be payable to the tenant if the Disclosure was not given or was defective.

Landlords should ensure that they comply with their disclosure obligations to avoid giving a tenant an easy way out of their lease early in the term.

If you require any assistance regarding commercial and retail leasing, please contact us.