Commercial & Retail Leasing Expertise
We provide comprehensive legal advice to both landlords and tenants on all aspects of commercial and retail leasing.
Key Aspects of Retail Leasing
Regulatory Framework
The Act requires landlords to provide tenants with a Disclosure Statement at least seven days before a lease is signed, outlining key financial and operational terms.
Cost Responsibilities
Landlords are generally responsible for the preparation costs of the lease document, reducing the upfront burden on tenants.
Dispute Resolution
The Act requires parties to attempt mediation before commencing legal proceedings. Unresolved disputes can be heard by NCAT for claims up to $750,000.
*Please note: The Act may not apply to premises larger than 1,000m², leases over 25 years, or certain short-term agreements.*
Understanding Commercial Leases
Commercial leases cover premises such as offices, warehouses, and industrial facilities. These are not regulated by the Retail Leases Act and are governed primarily by common law and the Conveyancing Act 1919 (NSW).
Important considerations for commercial leases:
- Negotiated Terms: Parties have greater flexibility in negotiating terms, with the law assuming tenants have the capacity to seek independent legal advice.
- Cost Arrangements: The cost of preparing the lease is typically negotiable between the parties.
Tenant Due Diligence: These agreements offer fewer statutory protections, making careful legal review and negotiation essential for tenants.
10 Steps for Tenants
Helping you protect your business interests and providing you with guidance which could save you thousands.
Get Legal Advice Early
Consult a solicitor **before** paying a deposit, occupying, or signing anything. "Standard" documents often need legal review.
Negotiate Key Terms
Use your solicitor to negotiate favourable terms upfront. Key negotiation points include:
- **Outgoings:** Request they be limited to your lettable area ratio.
- **Incentives:** Ask for a rent-free period or a cash contribution for fitout costs.
- **Security:** Prefer a cash bond or bank guarantee. Avoid an unlimited personal guarantee if possible.
- **Option Term:** Negotiate a right to renew the lease and a cap on the rent increase for that term.
Solicitor Costs
For retail leases, you should not be responsible for paying the landlord's lease preparation costs.
Exclusivity
If operating in a shopping centre or retail hub, request a clause preventing the landlord from leasing nearby space to direct competitors.
Assignment
Ensure you can freely transfer (assign) the lease to a new owner if you sell the business during the term.
Analyse the Business Case
Project your profits and ensure the lease terms are financially viable. Research the location, talk to existing tenants, and understand your target customers.
Check Premises & Compliance
Inspect the property's condition, confirm parking arrangements, and verify with the local council that your intended use is permitted. Make council approval a condition of the lease.
Review & Execute the Lease
Have your solicitor review the final executed lease. Ensure all promises and agreed-upon terms are in writing. **Do not rely on verbal assurances.**
Complete Fitout Correctly
Ensure your fitout fully complies with the lease and relevant building codes. Agree in writing on a maximum cost for any required landlord works before signing.
Exercise Options on Time
If you plan on renewing the lease, strictly follow the formal notice periods and requirements set out in the document. Missing the deadline means losing your right to renew.
Understand End-of-Lease Obligations
Plan ahead to reinstate the premises to its original condition (excluding fair wear and tear) to ensure you get your full bond or bank guarantee returned without dispute.
Partner with Your Lawyer
Engage a solicitor specializing in leasing from the very beginning to guide you through each of these steps effectively and confidently.
10 Steps for Landlords
Securing and protecting your property interests to help build your investment could save you thousands.
Get Legal Advice Early
Consult a solicitor **before** negotiations begin, especially for retail leases where strict legal requirements apply from the very start.
Vet the Tenant
Conduct bankruptcy and company searches to confirm the tenant's **solvency** and ensure the correct company representatives are signing the lease.
Negotiate Strategic Terms
Use your solicitor to secure favourable conditions, focusing on:
- **Security:** Require a **bank guarantee or cash bond**, and crucially, an **unlimited personal guarantee** from company directors.
- **Outgoings:** Clearly document that the tenant is liable for all rates, taxes, and utilities.
- **Incentives:** Tie any rent-free periods or fitout contributions to the tenant's ongoing compliance, making them repayable if the tenant breaches the lease.
Costs
For commercial leases, the tenant typically pays all legal costs; for retail leases, they only pay for their requested amendments.
Formalise Agreed Terms
Before drafting the full lease, create and sign a brief document (Heads of Agreement) that lists all negotiated terms to avoid confusion later.
Comply with Retail Lease Law
If applicable, provide the tenant with the draft lease, disclosure statement, and tenancy guide well in advance. Be aware of mandatory minimum terms and fitout cost agreements to avoid penalties.
Avoid Liability for Representations
Ensure all statements made to the tenant are accurate and true, as you can be liable for losses resulting from misleading representations.
Execute the Lease Correctly
Ensure the lease is signed by the correct legal entity and that all guarantors also sign. **Do not allow the tenant to take possession** until the lease is fully executed and all initial payments (rent, bond) are received.
Register the Lease
If required, promptly register the lease with the relevant land titles office and provide a copy to the tenant within the legally mandated timeframe.
Clarify End-of-Lease Obligations ("Make Good")
The lease must explicitly state that the tenant is responsible for returning the premises to its original condition (excluding fair wear and tear) to protect your investment.
Manage the Bond and Breaches
Return the bond or bank guarantee only after confirming all lease obligations have been met. Act swiftly and carefully if the tenant breaches the lease to preserve your rights to claim against the security.