RETAIL SHOP LEASES – An important message for Landlords about disclosure!
As of the 25 November 2016, the Retail Shop Leases Amendment Act 2016 (Qld) made some important changes to the Retail Shop Leases Act 1994 (Qld) which you should be aware of. These changes apply to both pre-existing leases as well as leases entered into after the 25 November 2016.
The amendments clarify disclosure obligations, and make some key changes:
- the amendments create a new mechanism whereby pre-lease disclosure must be given to sub-lessees and franchisees;
- require landlords to provide a disclosure statement to a tenant exercising an option to renew the lease;
- allow tenants and assignees (who are not major lessees) to waive certain disclosure periods; and
- require an assignor to give an assignee a disclosure statement and a copy of the current lease before entry into the business sale contract.
A New Mechanism for Pre-Lease Disclosure for Sub-Lessees and Franchisees
A landlord may be required, upon request, to provide a current disclosure statement to a tenant or franchisee who wishes to sublease the premises. Disclosure must be provided within 28 days of the sub-lessor or franchisee’s request.[1]
Disclosure and Options to Renew
If a tenant exercises an option to renew a lease, landlords are now required to provide a current disclosure statement to the tenant within 7 days.[2] After disclosure is provided, the tenant then has 14 days within which they can withdraw their notice to exercise the option.[3]
The stakes are high if this obligation is not complied with – in this case, the tenant has the right to terminate the option lease within 6 months and the lessor may be liable to pay compensation.[4]
Waiving Disclosure Periods
A tenant may waive the 7 day disclosure period before entry into the lease in certain circumstances (however this does not apply to major lessees).[5]
Disclosure by Assignors
An assignor of a lease must give the assignee a disclosure notice and copy of the lease at least 7 days before a business sale contract is entered into.[6]
For more information on how these amendments may affect you, please contact Rebecca Lancaster at Maxwell & Lancaster Solicitors.
[1] Retail Shop Leases Act 1994 (Qld) ss 21C, 21D.
[2] Ibid s 21E(2).
[3] Ibid s 21E(4).
[4] Ibid s 21F.
[5] Ibid ss 21(2)(b), 21E(3).
[6] Ibid s 22B.