Retail Shop Lease - when do you need one
Posted on 19 September 2022
By Taylor Wilson
What is a Retail Shop Lease and When do I need one?
Whether you are selling clothes or a delicious meal, you may require a Retail Shop Lease. Our clients often ask us, “When do I need a retail shop lease?”, “Do I require one?”, and most importantly, “What protection does a Retail Shop Lease offer me and my business?”
What is a Retail Shop Lease?
A Retail Shop Lease operates under its own set of rules under the Retail Shop Leases Act (the Act), which applies to particular premises and business types.
Each State and Territory has a different definition of a Retail Shop Lease. This article focuses on Queensland Retail Shop Leases in particular.
When and Why do I need one?
If your business and the premises fall under one of the two requirements defined under the Act, it will be a requirement that your Lease is a Retail Shop Lease.
The two ways for your Lease to qualify as a Retail Shop Lease are:
- Your business is used wholly or predominantly for the carrying on of a Retail Business; or
- Your business is located in a Retail Shopping Centre which is further defined in the Act.
Exclusions do apply in certain circumstances and a Lease is not a Retail Lease if the premises:
- has a floor area of more than 1000m2;
- are located on a level of a multi-story building, or a standalone build where 25% or less of the total area is retail;
- are for an information, entertainment, community or leisure facility;
- are for telecommunication equipment;
- are for an automatic teller machine;
- are for a vending machine;
- are for an advertisement display;
- are for storage; or
- are for parking.
The Retail Shop Leases Regulation sets out a list of businesses that fall under the definition of a Retail Business, including but not limited to:
- Food retailing;
- Domestic appliance sales;
- Tattoo parlour;
- Fabric and other soft goods;
- Department stores;
- Photography studios; and
- Travel agency.
Requirement for Disclosure
Under a Retail Shop Lease, the landlord is required to provide a disclosure statement at least 7 days before a potential tenant enters into a lease. This is for the benefit of the tenant so that they are afforded the opportunity to confirm their financial position and whether they are able to enter into or renew their existing Lease.
In certain circumstances, the benefit of this disclosure period can be waived. Contact us to find out more.
The tenant is also required to provide the following documents, prior to signing the prospective Lease, to the landlord:
a) a lessee disclosure statement containing information about the tenant’s business circumstances; and
b) a legal advice report as well as a financial advice report (if the tenant has entered into less than five retail leases).
Benefits and Protections of a Retail Shop Lease for a tenant
Often our clients ask us, “What is the benefit of a Retail Shop Lease”. The Retail Shop Leases Act was implemented in order to protect tenants which is why a Retail Shop Lease provides benefits and protections which include:-
- Restrictions on outgoings payable;
- The landlord cannot pass on their legal fees for preparing the lease to tenants;
- The landlord cannot charge land tax to the tenant;
- Release of Guarantor provisions; and
- Restrictions in rent review mechanisms.
If you are unsure about whether your Lease is a Retail Shop Lease under the Act, our Commercial Law team at Omnia Legal is available to assist.
Get in contact with Omnia Legal to schedule your complimentary phone consultation.
This article provides general information on legal topics for educational purposes only, and should not be considered legal advice or recommendations. While we have taken care to ensure accuracy, Omnia Legal is not responsible for any errors, and makes no guarantees about the accuracy or completeness of the information. Links to third-party websites do not constitute an endorsement, and we are not liable for any damages that may result from using inaccurate or incomplete information. It's always best to seek legal advice for specific situations.