Being a tenant under the retail lease

Date

What are the important things I need to remember?

Both the landlord and tenant have to abide by the lease. Your lease will tell you things you have to do while you are a retail lease tenant. Here are some of the usual things:

  • Pay all of the rent and all of the outgoings on time. It is important to remember that, even if you believe that you are entitled to withhold or not have to pay rent or part of the rent for a particular reason (for example, you believe the landlord owes you money), the lease will normally prevent you from withholding any amounts from rent or outgoings. You will need to resolve the other issue as a separate matter with the landlord.
  • Have your rent reviewed. The date and method of review are important – make a note of them and factor them into your accounting procedures. There is the possibility that you may be required under a lease to exercise an option prior to being informed what the asking rent is for any renewed term. You also probably don’t have to get written notice when rent changes and may be asked for all increases at the end. Therefore know what you agreed to in the lease and plan for it.
  • Keep insurance current and make a note of when policies are due to expire. You will normally be required to provide the landlord with evidence that your insurance is current at least once a year.
  • Request the landlord’s consent to certain activities. You will most likely be required to obtain the landlord’s consent before you do certain things – like undertaking works on the premises, mortgaging your lease or selling your business and assigning the lease to the buyer.

Be active in monitoring yours and the landlord’s compliance with the lease. In terms of your obligations under the lease, make up a table setting out your obligations and when you are required to do certain things.

Don’t forget to also:

  • Make a note of your other obligations such as protecting the property or giving turnover figures to your landlord.
  • Work on maintaining a good relationship with the landlord but remember to keep notes.
  • Don’t let problems build up and then go in with a ‘boots and all’ list of demands. This will not improve your relationship. When you believe your landlord is not doing something that they are required to do under the lease, perhaps raise the matter in discussions with your landlord first. If the matter is not resolved, then set out your concerns in a letter to the landlord, advising the landlord of your concerns and identifying which clauses of the lease are relevant to those concerns.
  • Never be late with anything – your landlord doesn’t have to remind you but when it comes to negotiating changes or a lease renewal, they can hold your mistakes against you.

There are also some things your landlord must do. For example, your lease may require your landlord to repair and maintain, or provide estimates of outgoings (see Dictionary).

CASE STUDY

Carrying out works to the premises without the landlord’s consent

Laura’s restaurant has street frontage. Laura wants to undertake works to the front of her restaurant to

move the doorway from the left side of the shopfront to the right side. She is keen to get works underway as soon as possible and has her contractor friends commence works during a quiet weekend. The landlord becomes aware of the works and issues Laura with a ‘breach notice’, requiring her to immediately stop the works.

Under the lease, prior to commencing any works, Laura is required to request the landlord’s consent to any works undertaken on the premises, and to provide the landlord with copies of relevant plans and details as to who will undertake the works. This is to give the landlord control over changes to the structure of its building as well as to give the landlord comfort that qualified tradesman will be used for such works.