Entering a Lease can be daunting, particularly for a new Tenant or Landlord. It is important that both parties understand their obligations under the Lease and under the relevant legislation. There are a number of different Lease Agreements which Tenants and Landlords can enter into. The type of Lease will largely be dependent upon the premises and its intended use. With this in mind, what then constitutes a Retail Lease? Here, De Marco Lawyers answer the all too common question.
What is a Lease?
A lease is a legally binding contract between two parties, being a Landlord and a Tenant, with respect to the occupation of the leased premises.
What is a Retail Lease?
In Victoria, a Retail Lease is governed by the Retail Leases Act 2003 (Vic) (the “Act”). Under the Act, a Lease, is a retail Lease where the premises are used, or is proposed to be used, for the:
Sale of goods;
Hire of goods; or
For retail services.
If a premises is not used for any of the above “retail” services, the premises is more likely to be leased under a Commercial Lease.
Have I entered a Retail Lease?
Under the Act, a Tenant and Landlord are considered to have entered a Retail Lease when:
The Tenant, with consent from the Landlord, takes possession of the leased premises; or
The Tenant begins to pay rent for the premises; or
The Lease agreement has been signed by all parties (Landlord and Tenant).
What protection do I have as a Tenant under a Retail Lease?
A Retail Lease governed by the Act, offers additional protections to a Tenant as opposed to a Commercial Lease. Tenants are particularly protected in the following manner:
Prior to the commencement of the Lease, the Landlord must provide to the Tenant, a Disclosure Statement. This Disclosure Statement should give a detailed summary of the important terms of the Lease. The Landlord must give the Disclosure Statement, together with a copy of the Lease, to the Tenant at least seven days prior to the Lease being entered into;
The Tenant is not required to pay any legal costs, incurred by the Landlord, in preparation of the Lease. Furthermore, the Landlord cannot forward such costs on to the Tenant; and
Retail Lease Tenants are also protected against unconscionable conduct of a Landlord. This includes (but is not limited to) a Landlord refusing to negotiate terms of the Lease.
It is important that Landlords and Tenants understand their obligations under a Retail Lease. If you need assistance drafting, renewing or reviewing a Retail Lease, or if you are unsure whether you have entered a Retail Lease, please do not hesitate to contact Miss Bronte Strong of our office.
This article is intended only to provide a summary of the subject matter covered. It does not purport to be comprehensive or to render legal advice. No reader should act on the basis of any matter contained in this article without first obtaining specific professional advice.
DISCLAIMER: We accept no responsibility for any action taken after reading this article. It is intended as a guide only and is not a substitute for the expert legal advice you can get from De Marco Lawyers and other relevant experts.