Entering into a lease is a major financial and legal commitment. It can be just as significant as buying a house. As with any legal commitments it is essential to understand what it is before you sign.

A lease is a legally binding contract where a lessor (the owner of the property) permits a lessee (the intended occupier of the property) an exclusive right to use an area of the property (or sometimes all) on certain terms and conditions in exchange for consideration (commonly payment of rent).

In Queensland there are commonly 2 types of leases, retail leases and non-retail leases. For a lease to be deemed a retail lease it generally needs to:

  • be in a retail shopping centre; and
  • have a use that is predominantly retail (a coffee shop or a hairdresser).

In Queensland, the Retail Shop Leases Act sets out the criteria for what constitutes a retail shop lease. Generally, if you are engaged in the business of selling goods or services directly to the public, you will need a retail shop lease.

Bellco Law’s team of property lawyers can assist you with any determination of applicability of the Act to you and your business.

Although there is no minimum in the Retail Shop Leases Act most retail shop leases have terms no greater than a combined 10 years (initial term plus options).

For leases that fall within the confines of the Retail Shop Leases Act there are far higher degrees of protection for lessees than that found in leases not subject to the Retail Shop Leases Act.

Some examples of the protections that are unique to retail shop leases are:

  • Lease preparation costs – a lessor is prohibited (in certain circumstances) from passing on its legal costs incurred in relation to preparing the lease.
  • Lessor Disclosure Statement – a lessor, during the negotiation stage, is to provide a disclosure statement with a draft copy of the lease 7 days before the lessee enters into a lease.
  • Rent reviews – only one method of annual rent review is permitted.
  • Renewal where no option – a lessor is to given notice to a lessee whether it intends to offer the lessee a new term of lease or not within a particular timeframe prior to expiry.

Lessor disclosure is the type of disclosure a lessor in a retail shop lease is required to give to a lessee prior to the parties entering into the lease. 

Lessor disclosure sets out the essential terms (rent, term, use, outgoings, how rent increases, options) of the lease. Incorrect or inaccurate disclosure can be detrimental to a lessor.