The Commercial Tenancy (Retail Shops) Agreements Amendment
Act2011 was assented to on 14 December 2011 with its
main provisions expected to come into effect in early 2012.
These amendments will have a significant impact on agents
involved in retail leasing and will require changes to disclosure
statements, the provisions of the lease and other management
procedures throughout the term of the lease. This article aims to
set out the major changes that will affect leasing agents and
property managers, and their landlord clients.
Under the new amendments, a disclosure statement must notify
tenants of any obligation to contribute towards the cost of the
landlord's fixtures, fittings, equipment or services. If this
information is not included in the disclosure statement, any
provision to that effect in the lease will be void
and cannot be enforced by the landlord.
We expect that there will be a new form for disclosure
statements within the amended Regulations (yet to be published)
which will probably include provision for notifying tenants of this
information. Agents must however be aware of the amendment to
ensure that landlords can continue to claim such expenses from the
Further, if any information in the disclosure statement is false
or misleading in any way, or incomplete, the tenant will now have
the option to terminate the lease at any time within the first 6
months of the term (currently 60 days).
Tenants have more time to exercise option to renew term
Under the current Act, tenants must notify landlords at least 90
days before the end of the lease term if they wish to exercise an
option to renew the lease for a further term. This will now be
shortened to 30 days.
Obligation to notify tenant of option to renew term
There will be a new provision in the amended Act requiring
landlords to give the tenant written notice of the last date by
which the tenant must exercise their option to renew the lease,
after which they would no longer be able to exercise their option
This notice must be given not more than 12 months, but at least
6 months before the end of the term.
If the landlord delays in giving such notice to the tenant, the
tenant's time to exercise the option to renew is extended by
the same period as the landlord's delay. Depending on the
length of delay, the tenant may even be able exercise an option to
renew after the term of the lease has expired.
Legal costs no longer recoverable
Landlords will no longer be able to recover legal costs from the
tenant for preparing a lease, or for extensions and renewals of a
Reasonable legal costs for assigning and sub-letting may still
be recovered from the tenant.
If the landlord intends to include a clause in the lease dealing
with relocation of the tenant's premises during, for example,
redevelopment, there will now be standard clauses which can be
included in the lease. Any non-standard relocation/redevelopment
clause will have to be approved by the State Administrative
The standard clause for relocation after the first 5 years of
the term will be included in new section 14A of the Act. The
Regulations (not yet published) will provide a standard clause for
relocation within the first 5 years of the term.
Other changes: Short term leases and definition of 'retail
The changes to the Act will now allow for a short term lease of
up to 6 months without requiring the landlord to grant a minimum 5
Also, the definition of 'retail shopping centre' will be
amended to include only those levels of a shopping centre
containing retail shops and will no longer apply to other
commercial premises on levels containing no retail premises.
The amendments to the Act do bring in other changes that are not
mentioned in this article.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Many retail leases include a covenant to trade, requiring the tenant to open the premises for trade during certain hours.
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