Commercial Law | Commercial and Retail Leases

There are numerous of things to think about regarding commercial and retail leases. Make it a habit that you are well informed at all times.

A lot of people fail to understand the complexity of a commercial lease and how easily it can be associated with many issues. In contrast to residential leases, commercial leases can have many dubious implications that may become a problem in the future.

Commercial Lawyers Explain Retail Leases

Make sure that you are updated on the legalities of retail leases.

The Retail Leases Act 1994 of New South Wales has gone through some important modifications that impact on the negotiation and drafting of leases for retail businesses.

Retail leases are different from commercial leases and are under a different set of laws. It is important to seek professional advice from an expert conveyancer to make sure that your rights and obligations are protected during the course of the lease regardless if you are the lessee or the lessor of a retail property.

Things that you need to take note of when you are the landlord of a commercial lease:

  • Acquiring the correct security on the lease. This may mean requesting a bank guarantee or cash deposit, which is normally to the value of three months rent.

  • Whether the lessor or lessee is responsible for the fit-out of the premises and determining who will own the fit-out at the end of the lease, as well as determining who is responsible for refurbishing the premises at the end of the lease.

  • Most commercial leases normally exceed three years, inclusive of options to renew. This means they need to be registered with the NSW Land Titles Office. Consent must be obtained from your mortgagee for the lease to be able to register.

  • General landlord duties in terms of maintenance and access of common areas, lobbies, lifts, toilets, and related areas.

What’s a commercial lease?

A business property lease – otherwise known as a commercial lease – is a contract that legally binds a business owner and the owner of the property. The said contract is usually more complex than residential leases because the leasing documents for a business property lease requires heavy customisation depending on the property involved.

In light of this, the leasing terms and conditions must be reviewed with a sharp eye to make sure that both the business owner and the owner of the property benefit fairly from the leasing document.

A commercial lease grants the lessee with the right to exclusive possession and the right to use the property to run a business. Moreover, there are several kinds of leases available to businesses, usually depending on their classification – may it be retail or commercial.

With that said, the two classifications have many things in common while also having many legal differences to consider as well. There will be different requirements with regard to the length of the lease and the fees to be paid thereafter.

The criteria that will be taken into account, documented, and negotiated between the property owner and business owner are as follows:

  • Assignment/Subletting

  • Required Insurance

  • Terms of lease

  • Obligations of both parties once the lease has ended.

  • How much rental payment is to be paid and how often payments will be made.

  • Start date of the rent period. This depends on the completion of fit out and the required approvals for the business.

  • Outgoings payable by both the landlord and tenant.

  • Whether renewal options are available or not and how/when this option can be exercised.

  • The agreement on maintenance. The landlord is usually responsible for any structural repairs while the tenant is responsible for the day-to-day maintenance of the property.

  • The scope and limitations of how the property can be used for business.

  • The type of business permit obtained.

Special Considerations for Retail Leases

There is a unique set of rules that govern retail leases. Regardless of you being a retail landlord or tenant, it is in your best interest to seek the help of a terms and conditions lawyer or a commercial lawyer to make sure that your rights and obligations are made clear and properly documented to avoid any issues in the future.

A retail lease can be affected by significant changes in the Act, such as:

  • The definition of a retail business and whether or not your business falls under this category. If it does, then it is also covered by the Act.

  • The lessors are under great obligations to disclose any information to the lessees regarding the property once the negotiation stage has commenced up until the leasing period begins.

  • The act will have a new Section written in light of any misleading or deceptive conduct made by either the lessees or the landlord.

  • In the event that both parties fail to agree on the rent, independent retail valuers will be used to come up with the final rent amount.

  • Lessors are required to disclosed details relating to any possible disturbances that can impact the lessees’ business operations.

  • New provisions will be made for any possible fitouts. The costs and how they are dealt with will also be considered between the lessor and lessee.

  • New restrictions regarding the advertising of any available retail space to new tenants.

  • A new security bond is in motion and it now requires payment of a bond to the Office of the Small Business Commissioner.

Regardless of you being a commercial or retail lessor or and probably lessee, the commercial law experts over at Executive Legal can always provide you the assistance you need in dealing with retail and commercial leases.

Prior to entering a lease, it is in your best interest to seek the expert help of an experienced commercial lawyer. Opting against doing so can result in negative results for your business in the future

Our Sydney-based team of commercial lawyers can help you with:

  • Commercial and retail leases drafts and documentation

  • Review on retail and commercial leases

  • Offer advice on retail and commercial leases

  • Negotiate favourable and fair terms of retail and commercial leases

  • Offer advice on lease dispute

  • Handle and lease disputes

  • Serve as your legal representation at the Sydney Civil and Administrative Tribunal hearings in the event of a lease dispute.

 

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*All information displayed on the Executive Legal website is informational and shall not be deemed as legal advice. If you’re currently dealing with an individual legal situation, you’re invited to contact us through email or by phone. Until an attorney-client relationship has been established, we urge that you avoid sharing any confidential information.