Retail Leases: A General Overview

John Kafrouni

15 Sep 2011

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min read

A lease provides a written record of the terms and conditions for the occupancy of the property by the tenant with the Landlord. Its purpose is to create certainty of the occupancy and terms and conditions of use.

Entering into a lease is a very important element of any business, it represents the right for a business owner to conduct business from a particular location; as well as representing one of the businesses largest outgoings.

There are a few key things to consider when entering into a retail shop lease.

Rent

This is an important element of the lease. How much rent will the tenant be paying per payment period and through the term of the lease. It is however not the only cost associated with a lease.

Outgoings

The terms of the lease may provide that the tenant may be liable for certain outgoings ranging from utilities to contributions to costs imposed by Landlord for marketing and other activities undertaken by shopping centres.

Term and Options for further Terms

The lease will provide for an initial term. This may be a matter of months or years. It may also provide an option to renew. This can often include several options. Eg. an initial term of 3 years with option to renew for another 3 year period.

The option to renew will be based on certain terms and conditions, most often the compliance of the tenant to the terms of the leas. Eg. there are no significant breaches during the initial term. There will often be a mechanism to renegotiate the financial terms.

Suitability of the premises

This raises several issues, namely the condition of the premises, the required licences and regulatory compliance as well as the nature of the business to be conducted at the premises. Can the business legally operate from the premises.

Trading Hours

Trading hours can often be an issue for business owners in shopping centres as they may have to give undertakings to operate whilst the shopping centre is open. Trading hours can also be dictated by the relevant state rules and regulations.

Sale of business

It is important to consider the transferability of the lease as it is an important asset of a business and is often essential for the sale of business.

Legislative Protection for the Tenant

Retail leases are governed by the Retail Shop Leases Act in Queensland which confers certain rights and obligations on both the Tenant and Landlord.

Joe Kafrouni, Legal Practitioner Director, Kafrouni Lawyers

Disclaimer

The information provided by Kafrouni Lawyers is intended to provide general information and is not legal advice or a substitute for it. Business people should always consult their own legal advisors to discuss their particular circumstances. Kafrouni Lawyers makes no warranties or representations regarding the information and exclude any liability which may arise as a result of the use of this information. This information is the copyright of Kafrouni Lawyers.

Liability limited by a scheme approved under professional standards legislation.

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