Key differences between retail and commercial leases
There are substantial differences between retail and commercial
leases that both landlords and tenants ought to be aware of. It is
important for businesses not to fall into the trap of thinking that
both leasing arrangements protect the same rights and impose the
Here are some key differences that you should consider before
entering any lease:
At present there is no set legislation that governs commercial
are governed by the Retail Leases Act 1994.
Leases of this nature can vary in duration and are often a point
of negotiation between the parties.
A minimum term
of five years is granted to the tenant (unless a Section 16
Certificate is signed).
It is normal practice for tenants to be responsible for the
landlor d's legal costs.
Tenants and landlords are responsible for their own costs.
In the event of a dispute regarding the lease, each party can
instigate proceedings without the need for mediation.
Parties to a
retail lease are obligated to first mediate before seeking the
assistance of the NSW Civil and Administrative Tribunal to resolve
The landlord's real estate agent is usually responsible for
holding onto the security bond or bank guarantee.
bonds are held by the office of NSW Fair Trading.
In the event that the tenant wishes to transfer the lease to a
third party, the tenant must follow the procedure stipulated within
Part 5 of the
Retail Leases Act 1994 provides the tenant with a process
of which they must follow should they wish to transfer the
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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Warranties can be risk-shifting mechanisms when the party giving the warranty is not the party at fault for the defect.
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