Posted on December 05, 2023
Kathy Nguyen
If you intend to enter into a retail lease agreement, it is important to understand your rights as a tenant. Before signing the lease agreement, we recommend that a comprehensive review of the lease is conducted.
Tenants do not often appreciate that they can negotiate lease terms, and often sign a lease that is not suitable for their needs, and landlords will often concede on terms to source a tenant, which is not always required.
Under the Retail Leases Act 2003 (Vic) (the Act), the following minimum requirements must be met:
- Tenants have the right to a minimum term of 5 years (including options of further terms), under section 21 of the Act. If you choose to have a shorter term, you are able to waive your right by applying to the Victorian Small Business Commission (VSBC);
- Landlords are unable to pass on the costs of preparing the lease and disclosure statements to tenant;
- A security bond if paid in cash must be held in an interest-bearing account. A security bond can also be in a form of a bank guarantee;
- Outgoings for the premises must be detailed in the lease and disclosure statement. Under the Act, tenants are not liable to pay for outgoings except where detailed in the lease and an estimate of outgoings is also provided; and
- A disclosure statement must be provided no later than 14 days before the lease is entered into.
When reviewing a lease, we take into account what the parties’ intentions were when discussing the terms of the lease, and we make sure that the lease reflects those intentions.
We also advise you in relation to important terms for your consideration and ensure that you understand your rights and obligations under the lease, and negotiate lease terms to reflect terms suitable for you. We undertake this review on behalf of both landlords and tenants (never for the same lease), and the considerations are vastly different for each party.
When your lease is up for renewal, we further recommend that the renewal of lease and updated disclosure statement is reviewed, to make sure that there are no hidden costs or outgoings that are unfairly apportioned to you, or any attempted amendments made by either party.
The team at Scanlan Carroll can also provide assistance by drafting Leasing Agreement and Disclosure Statements if the matter is in the early stages.
If you have any queries in relation to your retail lease, please do not hesitate to contact the commercial team at Scanlan Carroll on (03) 9853 0311.
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