Governed by the Retail Leases Act 1994 (the Act) the landlord must give you a landlord’s disclosure statement which provides information about the premises to be leased and the subject lease.
The tenant is also required to provide a disclosure statement. This statement confirms what information and documents have been received, and you should also add any information about possible trade in the leased premises.
The minimum period for any lease under the Act is five years which can be made up of the initial period and any option period. You can agree to a shorter period but you need a certificate from a lawyer or conveyancer confirming that you agree to the shorter period. If the landlord has agreed to a rent free period the condition needs to be included in the terms of the lease – and you are normally still required to pay outgoings during a rent free period. You also need to have council’s permission to undertake your chosen business from the premises.
Shopping centre leases are especially onerous and care should be taken about terms that include:
- Your agreement to provide turnover information
- Additional rent determined by level of turnover
- Contribution to centre advertising and marketing
- Opening hours (especially during long public holidays)
- Fit out of premises after a set period of trade
You don’t have to pay the landlord’s legal costs of preparing the lease, but you may be required to pay the cost of registration of the lease on title, and a mortgagee’s costs of approving the lease and making the title available for registration. You are required to pay a bond and the amount usually represents an amount equivalent to three months’ rent and outgoings.
Similar considerations apply to retail leasing but there is no specific Act for this type of leasing. The landlord does not need to provide a disclosure statement, but you are entitled to know the outgoings and confirm you are paying the correct percentage. Normally you will be required to pay the legal fees for the lease preparation, and there is no minimum leasing period.
Make sure the terms of the lease reflect the agreement you reached with the landlord. Generally most of the terms of the lease are generic in that many of them apply to all leases, but specific amendments may need to be made to reflect your particular terms of agreement.