NSW Retail Tenancy Laws

In NSW, Retail Shop Commercial Tenancies are subject to and governed by the Retail Leases Act 1994 (the Act) and the Retail Leases Amendment Act 2005.

The Act regulates the rights and responsibilities of tenants and landlords in NSW and came into effect on the 2nd of June 1994.

The Act applies to most retail premises but not all businesses. It sets out legal arrangements between landlords and tenants for shops selling and supplying goods and services, where the shop is less than 1,000 square metres and is used for a retail business.

Exclusions under the Act

There are however some situation where tenants are excluded from coverage under the Act. “Retail Premises” does not include those where the tenants are in the business of

• wholesaling,
• manufacturing
• storage
• nor does the act apply to any shop located within a cinema, bowling alley or skating rink.

A full list of the types of retail businesses covered under the Act can be found in Schedule 1 of the Act.

Act encourages Fair Conduct

While a landlord has a fundamental right of control over the use of its property, this right does not extend to engaging in unfair business practices.

Recent amendments clearly offer further protection to tenants, the Government regarding them as the less powerful party in most retail leasing transactions. As a result, the landlord needs to take greater responsibility and a more pro-active approach.

The Law in NSW, is clear:

A party to a retail shop lease must not, in connection with the lease, engage in conduct that it is misleading or deceptive to another party to the lease or that it is likely to mislead or deceive another party to the lease. A party or former party to a retail shop lease who suffers loss or damage by reason of misleading or deceptive conduct of another party may recover the amount of the loss or damage by lodging a claim against the other party under section 71.

If a landlord fails to give enough information s/he is guilty of Unconscionable Conduct.

For new leases a landlord has to provide the tenant with

• A copy of the unsigned draft Retail Lease Agreement (with the names and addresses of the parties included) as soon as you commence negotiations.

  In fact a person may not invite or offer to enter a lease or advertised retail property for rent unless the landlord has in his possession a copy of the proposed lease

• A Disclosure Statement. The disclosure statement details all financial items which a tenant might be
  expected to pay. These relate to important aspects of the lease, such as annual maintenance and
  repair of the building as well as rates, taxes, levies, rent and other outgoings.

  If you require the tenant to pay for or contribute to the fit out of the premises then you must disclose this fact in the disclosure statement. Failure to disclose will render the provision in the lease void.

• Once negotiations begin (the disclosure stage) and in no case less than 7 days before entering the lease,that is, negotiations must continue for 7 days; a landlord can’t just sign a tenant up on the spot. The laws require landlords and their agents to provide the tenant with a copy of a government – prepared Information Brochure. This retail tenancy guide is freely available from the NSW Office of Fair Trading Website.
• The landlord must give the tenant a copy of the signed lease. If the landlord doesn’t supply a completed copy of the lease, or doesn’t do it within 1 month of its signing, or the disclosure statement is wrong, the tenant can end the lease within six months of entering it.

Tenant Must Provide

The tenant must give the landlord a tenant’s disclosure statement within seven (7) days of the prospective tenant receiving the landlords Disclosure statement. This is a statement by the tenant about their ability to meet the obligations imposed upon them under the proposed lease.

Term of lease

Like the law in most other states, the minimum term plus any option to renew must be at least 5 years.

Longer term leases are an asset to both the tenant and the landlord. Shorter term leases are possible if the tenant has received independent legal advice from a lawyer or conveyancer not working for the landlord and the adviser issues a section 16 certificate. The certificate must state that advice has been given about the limited term and the tenant agrees to the shorter term lease, otherwise the lease is deemed to be extended to 5 years.

Landlord covers cost of preparing legal documents

Under the Retail leases Act 1994 landlords cannot recover the costs associated with preparing the lease and disclosure document from the tenant or ask for key money. Fortunately its not all bad news for landlords because RP Emery and Associates are providing an cost-effective alternative for the Do-it-yourself Landlord.

Professionally prepared Retail Tenancy Lease Kits are now available to help the DIY landlord negotiate and complete a compliant Retail Lease Agreement. The kit gives you all the tools you need to successfully complete a NSW Retail Tenenacy Lease without spending thousands on legal fees.

To read more about our DIY Retail leasing Kits click here.