If you are a tenant and have signed a retail shop lease in Queensland, you need to make friends with the Retail Shop Leases Act 1994 (Qld) (the “Act”). All retail shop leases are governed by the Act. The Act is mainly in place to help level the “playing field” between landlords and tenants so having some knowledge of its provisions can really help you as a tenant.
You normally need to obtain a Legal Advice Report and a Financial Advice Report
Under the Act, you are required to obtain a legal advice report as well as a financial advice report prior to signing a lease if you have less than 5 retail leases. These reports need to be given to the landlord prior to the commencement of the lease.
Landlords and Tenants have to provide disclosure statements
If you are a prospective tenant, you will need to give your landlord a disclosure statement at least 7 days before you enter into a retail shop lease. Your prospective landlord is also required to provide you with a disclosure statement. A landlord’s disclosure statement contains information relating to the prospective lease and a tenant’s disclosure statement contains information about the tenant’s business circumstances.
You can access a copy of a template of the tenant’s disclosure statement form here: https://publications.qld.gov.au/dataset/2597e0bf-81dd-4e6a-9367-235beceaa6fc/resource/809e8911-a270-491f-9789-f89d8af0eab2/download/approved-form-8-lessee-disclosure-statement.pdf
Understanding Common Terms in Retail Shop Leases
The key issues in relation to rent are:
· What outgoings are included in rent and what outgoings are not? Careful attention needs to be paid to the definition of “outlays”;
· How rent is reviewed and especially the “market review” timing.
Did you know that you can request for early determination of the current market rent if your lease gives you an option to renew or extend the lease? This can help you avoid a situation whereby you are “locked in” to a renewal or extension of your lease before you know what the new rent will be. See Section 27A of the Act.
Simply put, outgoings are all operating costs related to the running of the premises.
Most retail shop leases require tenants to pay money and contribute towards the outgoings. If your lease requires you to contribute money towards the outgoings, it must state:
· the outgoings payable by the tenant;
· how the outgoings will be determined; and
· how the landlord will recover the expenses from the tenant.
Additionally, the landlord must provide you with an annual outgoings estimate.
The lease should ideally make it clear what outgoings the landlord (not just the tenant) is agreeing to pay.
Common Areas &
These are areas which are intended for public use or shared with other tenants.
The key issues are:
· Does the lease include a licence right to use the common areas and car parks?; and
· does the lease prevent the landlord from making material changes to these areas that may adversely affect you?
There are some provisions in the Act about these but it’s also a good idea to ask for some changes to the lease if this is important to you.
|Unless you are in a major shopping centre, in our experience, you should be able to resist provisions requiring you to provide details or have your rent payments tied to your turnover.|
This refers to the specified trading hours for the tenant. These hours must fall within the hours which are permitted under Queensland legislation.
In our experience, unless you are in a major shopping centre, the landlord will often agree to the lease being amended (prior to signing) such that you are not obliged to be open for certain minimum hours. You need to be able to “take a break”.
Disputes and Compensation
If there are lease-related disputes between the tenant and the landlord, the Act provides a 2 stage process for resolution:
- Mediation; followed by;
- Referral of the matter to the Queensland Civil and Administrative Tribunal (QCAT) if the dispute is not settled at mediation.
As a tenant, you may be able to claim compensation under s 43 of the Act if the landlord:
- substantially restricts your access to the leased shop;
- substantially restricts or alters access or flow of customers or potential customers into or past your leased shop;
- causes a significant disruption to your business;
- does not rectify breakdowns or building defects as soon as practically possible;
- neglects the cleaning, maintenance or repainting of the building; or
- causes you to vacate your leased shop before the end of your lease in order to facilitate the extension, refurbishment or demolition of the building.
Other important updates
The Retail Shop Leases Amendment Act 2016 (Qld) introduced a number of key changes to the Retail Shop Leases Act 1994 (Qld).
You can find more information about these changes in the following article, written by our experienced commercial team: https://www.corneyandlind.com.au/resource-centre/commercial/queensland-retail-shop-leases_brisbane-commercial-lawyers/
How Corney & Lind Lawyers can help
Our skilled commercial lawyers can help you navigate the complexities of retail shop leasing. We are able to provide fixed fee high point advice conferences where we walk through the lease and make suggested hand notated amendments. At the end of that conference, we also provide the Legal Advice Report. We can also assist you with legal advice in the area of compensation under the Act.
Contact one of our Business Development Team officers today.
 Retail Shop Leases Act (1994) (Qld), s 22D.
 Ibid, s 37.
 Ibid, s 38A.