1 June 2008
It is almost 25 years since the original legislation relating to Retail Shop Leases was first introduced in Queensland. During that time the Act has been changed a number of times, the most recent changes being in 2006.
Landlords and tenants of retail premises need to be fully aware of their basic rights and obligations under the Act.
In particular, landlords and their agents need to be aware of the disclosure requirements when tenants enter into Leases and also when tenants wish to assign their Leases. If these disclosure requirements are not strictly complied with, then the tenant may have the right to terminate the Lease and/or seek damages from the landlord.
Additionally, landlords need to be aware that the Act regulates methods of rent reviews, outgoings recovery, the operation of relocation and demolition clauses, assignments and other provisions commonly included in Leases.
Tenants entering into Leases or assigning their Leases also have disclosure requirements which they must comply with.
In relation to assignments, for Leases entered into after 3 April 2006, the tenant will be released from its obligations under the Lease arising after the date of the assignment if the relevant disclosure requirements have been complied with fully by all parties (landlord , tenant and incoming tenant )
From a landlord's view point, this means that the landlord might wish to ensure that it has a Bank Guarantee from the original tenant or an ability to ask for an increased Bank Guarantee amount should the Lease be assigned to a tenant who may not be as financially strong as the original tenant.
From a tenant's view point, the tenant will want to ensure that it is released from its obligations under the lease and that the disclosure requirements are complied with (bearing in mind that the release does not apply to a guarantee of the liability of a tenant company by the directors or other parties).
The Retail Shop Leases Tribunal provides a mechanism for resolving disputes between landlords and tenants initially involving mediation. If that is unsuccessful proceedings may be brought in the Tribunal.
Parties seeking more detailed information regarding their rights and obligations should seek legal advice.
Mark Freudenberg
Associate
McCarthy Durie Ryan Neil
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