Landlord obligations at the end of a Retail Lease

Asking Retail Tenants to Leave

No one likes a houseguest that doesn’t know when to leave, and neither does a landlord in a Retail Lease. 

The Lease: What it Does and Doesn’t Say

Whether you are a landlord or a tenant trying to run your business from leased premises, it’s important to have a clear and comprehensive document that sets out everyone’s rights and responsibilities. 

In addition to having everything in writing, it is important to also obtain sound legal advice when it comes to understanding the rights and obligations of the parties to certain leases. 

The Retail Leases Act 1994 (NSW) (“the Act”), sets out a comprehensive framework of processes, restrictions, and protections for tenants that fall under the scope of the Act. 

Landlords may find that their lease inadvertently falls under the scope of the Act as a “Retail Lease” as a consequence of the type of business run by the tenant; the location of the premises, regardless of the use; or even the ownership and use of the neighbouring premises. 

It is important to obtain advice as to whether the Act applies to a proposed lease. If the lease falls within the scope of the Act, the Act overrides any clauses of the lease that are inconsistent with the Act, and the parties should be aware of their obligations to ensure that the transaction runs smoothly from start to finish. 

Communication is Key: Notice of Lessor’s Intentions at End of Lease

A lease will generally set out the obligations for when the lease is coming to an end. However one additional obligation imposed by the Act is for the Landlord to provide the tenant with written notice of their intentions. 

Section 44 of the Act requires that in the 6-12 months before the end of a Retail Lease, the Landlord provide written notice either confirming:-

a) the terms of a proposed renewal or extension of the lease, including the new rental, or 

b) written confirmation that there shall be no proposed extension or renewal

Landlords should be wary that if this notification is not provided, the Act allows the tenant to choose to extend the term of the lease for 6 months after a notification is finally given. 

It should be noted that these timeframes are shortened for leases of 12 months or less, and do not apply to leases containing an option to renew or extend the lease, or that are subject to an agreement for renewal or extension. 

The Act also imposes potential fines of up to $5,500.00 for landlords advertising their premises for lease prior to providing the notice to the tenant in certain circumstances. 

Whether it is to avoid fines, sudden surprises regarding the length of your lease or just maintaining a good working relationship, communication and sound legal advice are key.  If you are a current or potential landlord or tenant to a commercial or Retail Lease requiring advice or assistance, contact Baker Love Lawyers. 

Related Tag:- Estate Law Firm Newcastle

Subscribe To Our Newsletter