In Qld, Retail Shop Commercial Tenancies are subject to and governed by the Retail Shop Leases Act 1994 (the Act).
The object of this Act is to promote efficiency and equity in
the conduct of certain retail businesses in Queensland.
The Act regulates the rights and responsibilities of tenants and landlords in Queensland and came into effect on the 14th of September 1994.
The Act applies to most retail premises but not all. 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 used wholly or predominantly for the carrying on of 1 or more retail businesses.
A lease for a term of less than 6 months (without any option of the tenant to renew) is excluded.
“Retail Business ” does not include those where the tenants are in the business of wholesaling
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 Qld, is clear:
Section 46A (1) A lessor must not, in connection with a retail shop lease, engage in conduct that is, in all the circumstances, unconscionable.
Section 43 (1) The lessor is liable to pay to the lessee reasonable compensation for loss or damage suffered by the lessee.
If a landlord fails to give enough information she/he is guilty of Unconscionable Conduct.
For new leases the law requires the landlord to give the tenant a Disclosure Statement at least seven days before entering into the lease. Furthermore the tenant must receive a draft copy of the Lease Agreement at least 7 days before the tenant moves into the premises (that is, negotiations have to go on for 7 days; you can’t just sign a tenant up on the spot).
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.
If the landlord fails to provide a disclosure statement or provides a statement that is incomplete or contains information that is false or misleading, then the landlord is deemed to have issued a defective statement.
Such actions entitle the tenant to terminate the lease by written notice to the landlord within six months after the tenant enters into the lease. Furthermore the landlord is also liable to pay reasonable compensation for any loss or damage suffered by the tenant because of such non-compliance or defective statement.
The tenant’s disclosure statement provides an outline of the potential tenant’s business background and experience. It allows the tenant to record the details of the representations made by the landlord or their agent. Although there is no reciprocal right of termination for a landlord should a tenant fail to provide a disclosure statement,
Unlike all other states and territories Qld does not have minimum 5 year terms.
The term of the lease is important and longer term leases are an asset to both the tenant and the landlord. Depending on the circumstances a long lease may not be suitable. For example, if a new business in just starting its future success may be uncertain. In this case it may be prudent to have a shorter lease with an option or options to renew.
Under the Retail shop 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 a 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 Qld Retail Tenenacy Lease without spending thousands on legal fees.
To read more about our DIY Retail leasing Kits click here.