Answers to frequently asked questions

Date

What if the building is sold?

If the building is sold the obligations and rights under the lease generally transfer automatically to the new owner. There are a few personal rights that may need to be transferred (like security bonds) but this is usually dealt with in your lease.

By buying the building with notice of your lease (registration does this) the new owners generally become bound to you as though they were the original landlord. In some cases the landlord is bound in the same way even if they don’t have notice of your lease. Of course, it is always better if the new owner knows about the conditions in your lease. Most States and Territories allow leases to be registered by the Land Titles Office. This is one sure way of a new owner having notice of your lease. If your landlord won’t register the lease, in some States and Territories you can do it yourself. It is the most effective way to protect your interests.

Remember, depending on the term of your lease, it may be very important for your lease to be registered on the title to the land. See page 4 for more details.

What if the tenancy mix changes?

In most States/Territories your landlord is not required to protect you from competition or tell you about proposed tenancy mix changes unless you have a special written clause in your lease. This is why it is important to walk around and have a look at kiosks and tenancy mix before you sign the lease. If you are concerned and promises have been made, make sure that your lease includes these.

What if the landlord disrupts my business?

Retail landlords promise their tenants that they will have quiet possession of the retail space. Under your retail lease legislation you may be given additional rights if your landlord interrupts your business, for example, by creating disruption during refurbishment, putting up special displays on common property, or placing new temporary kiosks. Check your retail lease legislation.

CASE STUDY

Disruption of business by landlord

Adam’s shop is located within a shopping centre and has good visibility and good passing pedestrian traffic. The landlord allows for a small temporary kiosk selling lollies to open up out the front of the premises. The kiosk inhibits the visibility of Adam’s shop and has the effect of diverting pedestrian traffic around the front of the shop. Adam requests that the kiosk be moved or alternatively that he receive a reduction in rent whilst the kiosk is there. The lease does not say anything about this type of situation, however under the relevant retail legislation; Adam has rights to seek compensation from the landlord for a loss of quiet enjoyment of the premises. Adam would need to prove that his quiet enjoyment of the premises has been disrupted - this is likely to be difficult. It is not enough that the kiosk is affecting his business.

If there is a large space out the front of your premises that you rely on for good visibility of your shop, it will

be in your interest to ensure that the landlord does not do something within that space that negatively affects your shop. Although you normally can’t control who else leases shops within a centre, you may, within the lease document itself, be able to protect large open spaces from being filled with kiosks.

Can I mortgage my lease?

In some States/Territories you can mortgage your lease unless your lease says you cannot. Leases usually say you have to ask your landlord for permission. Your retail lease legislation may set out the steps you and the landlord have to follow when you want to mortgage, and what conditions the landlord can impose.

What if I want to sell my business or let someone else use part of my retail space?

This is often called ‘assignment’ or ‘subleasing’.

Leases usually say you have to ask your landlord for permission or consent if you want to assign or sublease your retail space (and you will usually have to pay the landlord’s costs for the landlord preparing a consent document that you, the new tenant and the landlord will sign). Your lease and the retail lease legislation may set out the steps you and the landlord have to follow, what conditions the landlord can impose and whether

or not you are released from future obligations under the lease after the sale of the business. If your retail lease legislation does not mention release then you are not released from your future obligations under the lease unless the landlord agrees to release you. Your guarantors may also remain liable unless you and they are fully released by agreement with your landlord. It is very important that you get expert advice on this.

What happens if I default under my retail lease?

Each lease can be quite different.

Your lease will tell you something about what happens in your situation. The law is complex so not many leases spell out in full either what is default or all of the consequences of default. It is very important that you get expert advice on what your lease says about default – particularly if you have been issued with a ‘breach notice’ by your landlord. Even a single default can have consequences years later (for example you may be liable for the legal costs of the landlord and future rent).

Most breaches are capable of being fixed, for example those like undertaking works without consent or not operating your business within the required hours.

If you are experiencing financial difficulties, it is important to talk to your landlord and try to come to some arrangement with your landlord before you go into default for non-payment of rent. Non-payment of rent or other monies under a lease is generally treated more seriously than other types of breaches.

CASE STUDY

Dispute when tenant’s business is sold

Chris has been advertising his business for sale for some time and has now found a potential buyer. Under the lease, he is required to obtain the landlord’s consent to an assignment of the lease to a new tenant. Chris requests the landlord’s consent and is asked to provide details of who the new tenant is, their financial

records and their experience in running a similar business. Chris tells the landlord that he does not have that information and does not believe he should have to provide it to the landlord.

In such circumstances, a lease and the relevant retail lease legislation will generally require the tenant to provide the landlord with the information that the landlord reasonably requests in relation to a proposed new tenant. The landlord is not required to obtain the information for itself. The landlord needs the information in order to assess whether the proposed new tenant will be a good tenant – just as the landlord assessed whether the original tenant would be a good tenant prior to entering the lease.

State and Territory Information Resources

Business associations

Business associations which may be able to assist you include:

National

Also check your local Yellow Pages® for specific industry
associations such as bakers, beauticians, butchers etc. You can also search for business associations on the Government and business associations directory.

Business licensing information services

You need to find out whether there are any licensing requirements for the kind of business you are opening. If you have already had a similar business, you still need to find out whether licence rules have changed

View Business Licence Information in your state or territory.

Information Guides

View the business.gov.au Information Guides

Australian Capital Territory

Legislation

Leases (Commercial and Retail) Act 2001

The Leases (Commercial and Retail) Act 2001 is available online from the ACT Legislation Register. Information is available at the Office of Regulatory services website or (02) 6207 3000.

Dispute Resolution

The Magistrates Court has jurisdiction to decide applications made under the Act on the Magistrates Court website or (02) 6207 1709.

Business associations

Retail Traders Association in the ACT and Region Incorporated is affiliated with the ACT and Region Chamber of Commerce and Industry. Contact the ACT and Region Chamber of Commerce & Industry for further information.

New South Wales

Legislation

Retail Leases Act 1994

Mediation services

Office of the NSW Small Business Commissioner website or 1300 795 534.

The Retail Tenancy Unit Dispute Resolution Kit

This kit has information about preventing and resolving disputes. Email

we.assist@smallbusiness.nsw.gov.au to request one to be posted to you.

Business associations

Northern Territory

Legislation

Business Tenancies (Fair Dealings) Act 2009

The Business Tenancies (Fair Dealings) Act 2009 is available online from the Northern Territory Legislation Database website. Information is available from the Office of Consumer Affairs website or 1800 019 319.

Mediation services

The Office of Consumer Affairs website or 1800 019 319. 

Business associations

Queensland

Legislation

Retail Shop Leases Act 1994

The Retail Shop Leases Act 1994 is available online. Information is available from the Retail Shop Leases Registry website or 1800 807 051.

Mediation services

Business associations

South Australia

Legislation

Retail and Commercial Leases Act 1995

Copies of the Retail and Commercial Leases Act 1995 are available online. Information is available from Consumer and Business Affairs or 131 882 or the Office of the South Australian Small Business Commissioner or (08) 8303 2026.

Mediation services

The South Australian Small Business Commissioner or (08) 8303 2026.

Business associations

Tasmania

Legislation

Fair Trading (Code of Practice for Retail Tenancies) Regulations 1998

The Fair Trading (Code of Practice for Retail Tenancies) Regulations 1998 is available from the Tasmanian Legislation Database website. Information is available from Consumer Affairs and Fair Trading website or 1300 65 4499.

Mediation Services

Consumer Affairs and Fair Trading or 1300 65 4499.

Business associations

  • Tasmanian Chamber of Commerce & Industry Ltd (TCCI)
    Ph: 03 6236 3600

    www.tcci.com.au

Victoria

Legislation

Retail Leases Act 2003

The Retail Leases Act 2003 is available from the Victorian Legislation Database website. Information is available from the Office of the Victorian Small Business Commissioner or (03) 9651 9316.

Mediation Services

  • Office of the Victorian Small Business Commissioner

    www.sbc.vic.gov.au
    Ph: (03) 9651 9316

Business associations

  • Victorian Employers' Chamber of Commerce & Industry
    Ph: (03) 8662 5333

    www.vecci.org.au

Western Australia

Legislation

The Commercial Tenancy (Retail Shops) Agreements Act 1985 and the Commercial Tenancy (Retail Shops) Agreements Regulations 1985 are available from the State Law Publisher website. Information is available from the Department of Commerce or 1300 30 40 54 and the Small Business Development Corporation or 13 12 49.

Mediation services

The Small Business Development Corporation or 13 12 49.

Business associations

  • Chamber of Commerce & Industry of Western Australia

    www.cciwa.com

  • Retail Traders Association of WA (affiliated with the Chamber of Commerce & Industry of Western Australia)
    Telephone: 08 9365 7695
    Email:

    rta@cciwa.com