Article by Eales & Mackenzie

This article provides some guidelines for a prospective tenant before putting the signature on the dotted line.

A retail lease agreement is not always comprehensible to a layman. Entering into a lease agreement without a proper understanding of your rights and obligations could severely affect your business venture and have you losing money on expenses you were not aware of.

Retail leases in Victoria are governed by the Retail Lease Act 2003 (‘the Act’) and Retail Leases Regulations 2003.Being consumer protection legislation, the Act sets out the obligations of the landlord before entering into a retail lease with a tenant. The Act also prescribes that a retail lease must be in writing with a minimum of 5 years term.

To fall within the ambit of the Act, the premises must be a ‘retail premises’. With some exceptions, a retail premises is a premises used wholly or predominantly for the sale or hire of goods by retail or the retail provision of services.

As soon as you commence negotiations with the landlord or the agent acting for the landlord, the landlord or the agent must provide you with a copy of the proposed lease and a copy of the information brochure (which can also be obtained from the Office of the Small Business Commissioner).

The Act prescribes that at least 7 days before entering into a retail premises lease, the landlord should give you a Disclosure Statement and a copy of the proposed lease in writing. The purpose of the Disclosure statement, in part, is to inform you of the various outgoings you are responsible for during the term of the lease, the lettable area, the core trading hours of the shopping centre (if applicable) and number of car parking bays in the centre, which may not be in the lease agreement. You should bring this Disclosure Statement and the proposed lease to a lawyer for advice prior to signature.

If the Landlord fails to provide you with the Disclosure Statement and the proposed lease at least 7 days before entering into the Lease, you may give a notice to the landlord no earlier than 7 days and no later than 90 days after entering into the lease telling the landlord that the Disclosure Statement has not been given.

Once you have given the notice to the landlord, you may withhold payment of the rent until such date the Landlord gives you the Disclosure Statement AND you will not be liable to pay the rent for the period from the date you give the notice and the date the landlord gives you the Disclosure Statement. Further you may be able to terminate the lease by serving a notice on the landlord before the end of 7 days after the landlord has given you the disclosure statement.

It is advisable that you put down the date you receive the Disclosure Statement on the Disclosure Statement for the reasons explained above.

You may also be able to terminate the lease if the Disclosure Statement given by the landlord contains false or misleading information.

Please note

You should not act only on the basis of material contained in these law tips because the contents are of a general nature only and may be liable to misinterpretation in particular circumstances. Do not act on any of the contents of this document without first obtaining specific advice from your own lawyer or Eales & Mackenzie