Retail Lease Update 2017 – Reiko Reynolds & Andrew Wong

1st Jul 2017

1. Minimum Term (Section 16)
– Minimum 5-year term is removed from the Act.

2. Registration of Retail Lease (Section 16)
– Leases for a term of more than 3 years must be lodged for registration within 3 months after the signed Lease is returned to the Landlord

3. Bank Guarantee (Section 16BA)
– Bank Guarantee must returned to the Tenant within 2 months after Tenant completes obligations under the Lease.

4. Mortgage Consent Fees (Section 3)
– The Act will be amended to specifically prohibit a Landlord from charging a Tenant expenses incurred in connection with obtaining the consent of a mortgage.

5. Demolition (Section 35)
– Clarifies that the protection to Tenants afforded by the Act applies to proposed demolition of the building or any part of the building. The Lease cannot be terminated by the Landlord unless the proposed demolition cannot be carried out practicably without vacant possession of the shop (Section 35(1)(a1)). Previously this position was reflected in the definition of demolition.

6. Lessor’s Disclosure Statement (Section 11)
– Right to compensation for lessee: If a Landlord fails to serve a complete and accurate Lessor’s Disclose Statement 7 days before the Lease is entered into, the Tenant now has the right to terminate the Lease within the first 6 months and claim compensation including the cost of its fit-out (Section 11(2A)).
– Disclosure of outgoings: The Tenant is now not liable to pay any outgoings unless the liability was disclosed in the Lessor’s Disclosure Statement (Section 12A).

7. Consent to Assignment (Section 41)
– Clarifies that the Landlord must provide an updated Lessor’s Disclosure Statement within 14 days of request (Section 41(c)). If the Landlord fails to do so, whereas previously this requirement could be ignored, now the Tenant must provide a Lessor’s Disclosure Statement completed by the Tenant to the best of the Tenant’s knowledge (but with information as to current outgoings) (Section 41(e)).
– A Landlord will not be able to withhold consent to assignment if a Lease was awarded by public tender and the proposed assignee fails to meet any criteria of the tender (Section 39).

8. Online Transactions
– Revenue from online transactions are not to be included in turnover for the purposes of determination of rent, except for transactions where goods or services are delivered or provided from or at the retail shop or where the transaction takes place while the customer is in the retail shop (section 20).
– The Bill will prevent the Tenant from having to provide the Landlord with information about online transactions, except for transactions where goods or services are delivered or provided from the retail premises or where the transaction takes place while the customer is in the shop (section 47).
– Note “online transaction” is not defined in the Bill.

9. NCAT Jurisdiction (Section 73)
– NCAT now has jurisdiction in relation to claims of up to $750,000.00.

10. Excluded Uses (Schedule 1A)
The Bill clarifies that Retail Leases Act does not cover the following:
– ATMs
– Car parking (not being car parking provided as part of the business of a car park)
– Children’s ride machine
– Communication towers
– Digital display screens
– Display of signage (not including the use of premises from which signage is sold)
– Internet booth (not being an internet cafe or similar use)
– Private post boxes
– Public tables and seating
– Public telephone
– Renewable energy generation
– Renewable energy storage batteries
– Self-storage units
– Storage of goods for use or sale in a retail shop (not including storage on premises from which goods are sold)
– Storage lockers
– Vending machine

11. Exclusion of Market Stalls (Section 6B)
– Clarification that the Act does not apply to market stalls unless the market is a permanent retail market.

12. Copy of Lease Term
– The Tenant must be provided with an executed copy of the Lease within 3 months after the Lease is returned to the Landlord or their lawyer/agent following execution.

13. Agreement for Lease (Section 3B)
– The Act clarifies that the Act applies to an agreement to lease in the same way as to a Lease.

14. Act Applies to Both Proposed Tenants and Landlords (Section 3(2))
– Where the Act refers to the rights and obligations of a Landlord or Tenant, it also applies to a provision regarding a proposed retail shop lease, including the proposed Tenants and proposed Landlords.

15. Retail Bond
– An “online retail bond service” may now be available.

16. Police Checks
– If the Landlord wishes to require police or security checks and clearances for persons employed or other persons working in the shop, they must include a provision for it in the Lease.

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Reiko Reynolds
Lawyer
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Andrew Wong
Lawyer
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