Qld Retail Leases – The Importance of Care

The first in our series of commercial property articles covers retail leasing in Queensland. With the steady increase of retail shopping spaces, it is important to understand the fundamental requirements as both the Lessee (the tenant) or Lessor (the landlord) in such a transaction.

The type of lease, and therefore its requirements, differ significantly between spaces used for commercial purposes, and spaces used for retail purposes. Due to political pressures in the 1990’s, the Retail Shop Leases Act 1994 (Qld) (“the Act”) was introduced to govern retail leasing, adding further requirements of disclosure and conduct, and consequences of failing to comply.

It is the intention of this article to briefly outline some of the additional requirements in a retail lease; however, no article can provide the type of comprehensive advice that is necessary for a complete understanding specific to a particular space, as such, we invite you to contact our experienced team to assist you.

What is a Retail Lease?

Simply, whether a lease is a retail lease is largely dependent on the use of the premises. If a premises is located in a retail shopping centre, or is to be used wholly or predominantly for the conduct of a retail business, then it is a retail lease.

A comprehensive list of what is considered to be a retail business is located in Schedule 1 of the Retail Shop Leases Regulation 2016 (Qld) (“the Regulations”).

Lessor Disclosure

The obligation is on the Lessor to provide to the Lessee disclosure of key facts of the lease, together with a copy of the proposed lease, at least seven days prior to the lease becoming binding on the parties or the Lessee taking possession of the premises. This seven-day period may be waived by a certificate of legal advice; however, this does not alleviate the Lessor’s obligation to provide the disclosure and proposed lease prior to the Lessee signing.

Updated disclosure must also be provided within seven days of a Lessor receiving notice form a Lessee that they have exercised any option they may have under an existing retail lease.

What is Disclosure?

The requirements of disclosure are set by the Act and the Regulations, and include:

• Details of the premises;
• Details of any shared amenities, such as air conditioning, cleaning etc;
• The term of the lease and any options available;
• The base rent payable and details of any annual reviews;
• Details of the outgoings payable, and an itemised list of these;
• Details of any marketing fund or percentage rent payable;
• Requirements of any fit out to be conducted by the Lessee;
• Details of any fit out or works to be performed by the Lessor;
• Further information for the specific shopping centre (if applicable), including details of the required trading hours, numbers of shops, traffic counts and information on any anchor tenants, being large supermarkets etc.

The form that the disclosure takes is usually the same across retail leases, with a set format being readily available to professionals for completion.

The Consequences of Non-Disclosure

The consequences of not providing adequate disclosure enables a Lessee to terminate a lease (or renewed lease) within six months of entering into it. Further to this, a Lessee may be entitled to compensation for their loss or damage that was a result of the defective statement.

Moving Forward

It is important when operating in the retail lease space to be familiar with the requirements of both the Lessor and the Lessee under the Act and the Regulations.

Lessors should entrust their lease preparation to properly experienced and skilled professionals to minimise any possibility of a defective disclosure statement or erring in timing.

Lessees should seek proper advice on their rights and obligations under a retail lease, for what is one of the biggest investments that a retail business owner may make.

If you require further information about your lease, or wish to speak with one of our professional staff, please contact CJM Lawyers and let us assist you.

Disclaimer: This article is for general understanding and should not be used as a substitute for professional legal advice. Any reliance on the information is strictly at the user's risk, and there is no intention to create a lawyer-client relationship from this general communication.