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What to expect when entering into a retail lease?

Written by Shavi Senevirathne


Prior to entering into a retail leasing agreement, it is vital you understand your expectations, rights, and responsibilities. Exploring and understanding your rights will help you to avoid current and future disputes which may be lengthy and expensive.

There are several key aspects for Landlords and Tenants to consider when entering into a retail lease:

  1. The Landlord or Landlord’s representative must provide a copy of the proposed lease. A lease is an important, enforceable, and legally binding document. Failure to provide a copy of the proposed lease is an offence under section 15 of the Retail Leases Act 2003 (the Act).

  2. The Landlord should provide the Tenant with a disclosure statement when entering or renewing a lease. The statement should be given to the Tenant at least 14 days prior to signing the lease. This statement outlines the key elements of the lease including the duration, options for further terms, costs for leasing premises and fit-out requirements. The Landlord cannot charge the Tenant for preparing the lease or disclosure statement.

  3. The lease should be in writing and signed by all the parties. The Landlord must give the Tenant a copy signed by both parties.

  4. All lease with a duration of five years or more should comply with Retail Leases Act 2003. However, Tenants can request a shorter term which complies with the Act. The main purpose of the Act is to enhance the certainty and fairness of retail leasing arrangements between Landlords and Tenants.

  5. Money paid as a security deposit (bond) must be held by the Landlord in an interest-bearing account, with the interest forming part of the security deposit. This can also be in the form of a bank guarantee. A security deposit gives the Landlord a level of protection if the Tenant fails to comply with their obligations under the lease agreement.

Understanding the terms of a potential lease agreement is crucial, otherwise you may not be able to use the premises as intended. If you require advice with respect to a retail lease, please do not hesitate to contact our office to speak with one of our experienced lawyers.

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