At one of the busiest retail shopping periods of the year, retail shop tenants will this Christmas receive the gift of a raft of amendments to the Commercial Tenancy (Retail Shops) Agreements Act to further protect them but with little or no time to prepare for the implementation of them.

The changes, set out in the:

  • Commercial Tenancy (Retail Shops) Agreements Amendment Act of 2011 ("The Act"); and
  • Commercial Tenancy (Retail Shops) Agreements Amendment Regulations (No2) of 2012 ("The Regulations")

were gazetted on 30 November 2012 and will be effective from 1 January 2013, despite:

  • the final version of the Regulations not being publicly available until they were gazetted on 30 November;
  • substantially larger new forms of disclosure statements and tenant guides having to be provided to prospective tenants prior to signing any new lease entered into from 1 January 2013, which have only just become available to landlords, agents, solicitors and tenants in the gazetted Regulations; and
  • many firms and parties being unavailable to deal with changes over the Christmas and New Year period.

Amongst the more noticeable changes to come into effect on 1 January 2013 are:

Applicable to All Retail Shop Leases, Whether Commenced Before or after 1 January 2013

  • Landlords will be prohibited from claiming legal expenses from tenants relating to the preparation, negotiation or execution of the lease, a renewal or extension, obtaining consent of a mortgagee to the lease, or for the landlord's compliance with the Act
  • Landlords will have obligations to provide information to valuers re market rent reviews
  • Landlords will have to notify tenants in writing a maximum of 12 months and a minimum of 6 months prior to the expiration of the date for exercise of an option period to remind them - this is something landlords and their agents will need to diarise to ensure the notice is properly given.
  • There is now a cause of action arising from the Act (in the State Administrative Tribunal for misleading and deceptive conduct in addition to the existing unconscionable conduct provisions - while this applies to all shop leases regardless of when they commenced, it only applies to conduct after 1 January 2013).
  • There is now a definition of "lettable area" which has express inclusions and exclusions - watch out for this one because this could give rise to disputes where the lettable area previously used differs from this defined area, and may require rent adjustments.
  • There are early termination provisions relating to liquidation or bankruptcy of a tenant or guarantor.

Applicable to New Retail Shop Leases Entered into on or After 1 January 2013

  • There are additional new disclosures required in the Tenant Guide and Disclosure Statement, and a longer opportunity for a tenant to terminate for non-disclosure (increased from 60 days to 6 months)
  • There are changes required to include detailed relocation, refurbishment and refitting clauses
  • If a tenant is in occupation/granted a lease for 6 months or more, they have a statutory right to a 5 year term (which means there can still be short term tenancies)

The changes provide additional protections and rights particularly for tenants and add additional burdens to landlords. For those involved in retail shop leasing, have a very happy Christmas and compliant New Year.

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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