Summary of Main Changes to Retail Leases Act 1994 – part 2
DISCLAIMER: This article was written to provide a high-level overview and does not constitute legal advice, and we recommend that you obtain a professional opinion to address your specific circumstances.
In a previous article, we addressed some of the minor and more major changes in the Retail Leases Act. In this final part, we look specifically at some of the changes that may impact on the Assignment of Lease and general lease administration processes.
A lessor must return a bank guarantee to the lessee within 2 months after the lessee completes performance of its obligations under the lease, and lessor is liable to pay the lessee compensation for any loss or damage suffered by the lessee as a result of the failure by the lessor to return a bank guarantee.
A lease can contain a provision specifying requirements in the nature of police and security checks and clearances for persons employed in the shop or other persons (such as contractors) doing work in the shop, but only with the approval in writing of the Registrar given in a particular case.
The Act is silent on checking and verification of identity and creditworthiness, and the due diligence process during the assignment is not impacted.
I should be noted that where Security Contractors are renting office space from which to operate, their employer may (and will) continue to perform appropriate checks to ensure suitability of employment, and this is not impacted by the changes in the act which govern the Landlord behaviour.
When the lease is entered into the lessor’s disclosure statement given for the agreement for lease is deemed to also have been given for the lease. A separate disclosure statement is not required to be given for the lease.
If the lessee terminates the lease because it did not receive the disclosure statement or the disclosure statement contained information which was materially false or misleading then the lessee is entitled to recover compensation from the lessor for costs reasonably incurred by the lessee in connection with entering into the lease, including fit out costs.
A lessor’s disclosure statement can be amended with the agreement in writing of the lessor and the lessee before or after the lease is entered into.
LEASE ADMIN & ASSIGNMENTS
The lessor must provide a lessee with an executed copy of the lease within 3 months after the lease is returned to the lessor or lessor’s lawyer.
Grounds on which an assignment of lease can be withheld has been added which provides that in the case of a retail shop lease which has been awarded by public tender, an assignee fails to meet the criteria of the tender.
Procedure for obtaining consent to assignment has also been clarified. An assignor is still required to provide an assignee with an updated lessor’s disclosure statement however, if the lessor fails to provide the updated disclosure statement to the assignor within 14 days of being requested to do so, it is sufficient compliance if the assignor provides the assignee with an updated lessor’s disclosure statement which has been completed by the assignor, to the best of its knowledge.
The assignor must provide the lessor with a copy of the assignor’s disclosure statement, together with a document which is signed by both the assignor and the assignee called the Disclosure Confirmation.
In short, if the Landlord is not organised and efficient in this regard, the Tenant can take a best guess and those terms (disclosed between assignor and assignee) will become binding on the landlord.
Dennis Price, Founder at www.yearone.solutions