Commercial and retail leases provide a tenant (lessee) with a right to occupy premises owned by the landlord (lessor) in exchange for rental payments and other conditions.
Leases are common commercial arrangements which provide businesses the opportunity to use premises for a specified time and in a location suited to their needs.
The Leases Act
The vast majority of leases in the ACT are governed by the provisions of the Leases (Commercial and Retail) Act 2001. There are however a small number of exemptions where the Act does not apply. It is essential for both tenants and landlords alike that they are aware of their respective rights and responsibilities under the Act should the Act apply to that lease.
In circumstances where the Act does apply, there are essential obligations which apply in relation to:
- The provision and timings of Disclosure Statements;
- The provision and timings of a Lease;
- Implied terms of a Lease; and
- Strict procedures which apply in the context of contravening and terminating a Lease.
Navigating your way around the Act and accompanying lease documentation can be difficult and professional advice should be sought early in negotiations.
Leases should be in writing and contain all of the negotiated terms. The following are some typical terms which you may find contained in a lease:
Area to be Leased
This should be clearly described with its legal description and street address and include use of additional facilities such as carparks, storage, amenities and other common areas. The area being leased should be clearly identifiable in a registered plan which shows the leased area and size of the premises.
Term of the Lease
The term (that is, the period for which the lease is in place) should be carefully considered. Lessees should ensure that the lease term and any renewal options coincide with their business plans. Options to renew, including the time and process for exercising such options, must also be clearly stated.
Rent and Outgoings
The rent, method and time for reviewing rent must be agreed upon and understood. The outgoings payable by the lessee are often disputed so estimates should be provided and the parties’ respective contributions clearly set out.
The lease should allow for the lessee’s intended use of the premises and be broad enough to cover any intended growth or extension of the business’ activities. Despite what is contained in the lease, it is the lessee’s responsibility to ensure that any necessary government approvals or licences are in place.
Fitout and Refurbishment
Lessees often require fixtures and fittings installed suitable for the intended use of the premises. The lease should include:
- The fitout permitted;
- Who is responsible for costs and installation;
- Whether fixtures may be removed by the lessee at the end of the lease; and
- Refurbishment obligations when the lease expires.
Other matters requiring consideration include insurance, assignment and sub-letting provisions, repairs and maintenance, rent abatement and what happens when a party defaults under the lease.
Lease documents should always be reviewed before allowing or taking possession of the premises.
Tetlow Legal is able to assist you with all your leasing needs, including;
- Preparation and review of Disclosure Statements and Leases;
- Review of Lease Proposals;
- Lease negotiations; and
- Advising on leases generally.
We act for both lessors and lessees and have extensive experience in preparing and advising on commercial and retail leases.