A commercial Lease is a tough commercial contract with security benefits for both parties but is generally biased in favour of the Landlord as protection in the event of substantive defaults by the Tenant (such as non-payment of Rent and Outgoings) and it is essential that both parties separately seek independent legal advice before entering such a contract of Lease, whether that party be either the Landlord (Lessor) or the Tenant (Lessee).
When entering a new commercial Lease with a Landlord of industrial or commercial premises previously unleased by the Tenant, an Agent is often involved and often the proposed Tenant is required to sign a pre-commitment generally called an Agreement to Lease (or to that effect) and it is important for both parties, but particularly the Tenant, to be aware that same is a binding document and therefore that whole document and particularly any unusual or special conditions in same can be binding and enforceable against them. The Agreement to Lease should include all specific and/or special agreements reached between the parties during negotiations and any promises made, otherwise they are very difficult to prove that they are binding. It is also important from the Tenants perspective that the Landlords Solicitors format of Lease be qualified in the Agreement to Lease to be “reasonable” in all respects and that the legal costs for same, usually borne by the proposed Tenants (except in the case of a Retail Shop Lease), must also be qualified to be “reasonable”.
If the premises qualify as a Retail Shop as defined in the Retail Shop Lease Act 1994 (the RSLA), then the Landlord must prior to Lease provide the proposed Tenant with a Lessors Disclosure Statement giving the proposed Tenant full particulars of the proposed premises and the Centre as required under the RSLA. The Lessors Disclosure Statement should also reveal all agreements reached between the parties during negotiations and all promises made. The proposed Tenant must subsequently prepare and deliver a Lessees Disclosure Statement and (unless the Tenant already has 5 or more other leased premises in Australia) a Legal Advice Report and a Financial Advice Report pursuant to the RSLA within the required time frames.
If the proposed Tenant is instead receiving an Assignment/Transfer of an existing Lease of a retail shop, then the proposed Tenant must also receive from the assigning/selling Tenant a copy of the Lease as well as an Assignors Disclosure Statement in addition to a copy of the Lessors Disclosure Statement, amongst other things. The proposed Tenant must also then prepare and deliver an Assignee Disclosure Statement and otherwise comply with the RSLA as a Lessee, usually including provision of a Legal Advice Report and a Financial Advice Report as previously mentioned.
The Retail Leasing Guidelines on www.justice.qld.gov.au are a good guide to the basic essentials in Leasing generally and specifically in relation to the Retail Shop Lease Act 1994 and compliance with same. However, we confirm that it is essential that both parties to a Lease seek independent legal advice before entering same (even an Agreement for Lease, or similar) be it in relation to an industrial or commercial Lease, or a Retail Shop Lease.