Legal Comment by Mark Illidge of Hinterland Lawyers

May 2006

Retail shop landlords and tenants should be aware of significant amendments to the Retail Shop Leases Act 1994 which came into effect last month in the form of the Retail Shop Leases Amendment Act 2006.

Some of the notable changes include:

Early Determination of Current Market Rent - a tenant can now request that the market rent determination is undertaken prior to exercising their option to renew the lease for a further term;

Market Rent Determinations - landlords and tenants can both make submissions to the valuer to assist in making determination of current market rent.  Submissions are to be made in writing to the valuer and a copy of the submissions must be given to each party;

Options to Renew Leases - the onus for notifying the intention to extend or renew a lease has been reversed and the onus is now on the landlord to notify the tenant.  At least two months, but no more than six months, before the option date, the landlord must give the tenant written notice of the option date.
This is a particularly onerous provision from a landlord's perspective as failure to comply may result in a maximum penalty of 40 penalty units (one penalty unit is currently valued at $75.00); and

Release of Assignor from Ongoing Liabilities - A retail tenant is now released from ongoing liability after an assignment if each of the landlord, tenant and assignee has complied with their disclosure obligations.  A landlord will need to scrutinise very carefully the financials of an incoming tenant.  The concern for tenants is that the new provision does not extend to the release of guarantors who will remain liable unless released by the landlord.  This may result in retail tenants choosing a non-company structure to give themselves the benefit of this release provision.

To find out more about the authors you can read About Us

For more information or to make an appointment please Contact Us