Commercial & Retail Leasing
If you are leasing commercial premises, whether as a landlord or tenant, it is important to take steps to protect your investment, and to understand your rights and responsibilities under a proposed leasing arrangement. All leasing negotiations should be documented in a written lease agreement and each party independently advised. Our experienced property and commercial lawyers can assist with all your leasing needs, including:
- Commercial Leases
- Retail Shop Leases
- Bulky Goods Centre Leases
- Agreements for Lease
- Extensions, Variations, Assignments of Lease
- Advice to tenants entering into new Leases
- Terminations of Lease
- Registrations of Lease
Agreement for Lease
An agreement for lease is a binding agreement between a landlord and a prospective tenant that sets out the rights and obligations of the parties. This form of contract is typically used when the premises are not yet available, such as when it is still under construction, the tenant is waiting for a consent or permission before occupying the premises, or there is an existing tenant still in situ.
Entering into a Lease
Signing a commercial lease is a significant step for a business owner. A lawyer can help by reviewing the lease prior to signing. This is a critical stage because both parties are keen to reach an agreement, and amendments to the lease can be achieved on the basis of this goodwill. In particular, the tenant should consider the clauses in relation to fit out and repairs and maintenance, as these can have a significant financial impact on a business.
Options and Transfer of Lease
Rather than signing an overly long lease, it is common for a commercial lease to contain one or more options to renew. This guarantees the tenant the right to renew the lease for an agreed rent (as long as they are not in breach of the agreement). It is also important that the lease allows for the tenancy to be transferred to a new owner if the business is sold during the term. This can be done through a sublease or assignment, depending on the terms of the lease.
Registering a Lease
A lease of more than three years (excluding any options to renew) can be registered. This will confer on the tenant a valid leasehold interest in the property. If you are entering a lease of more than three years, we can help you coordinate the registration of the lease on the property’s title.
Retail Shop Leases
In Western Australia, most retail shop leases are regulated by the Commercial Tenancy (Retail Shops) Agreements Act 1985. All owners of retail shops should have a good understanding of the Act, as it provides protections for tenants. The Act generally applies to leases for premises with a lettable area of 1000 m2 or less and that are:
- used for carrying on a business in a retail shopping centre (or a group of premises, of which five or more are used for the sale of goods by retail or a specified business)
- not in a retail shopping centre, but that are used (or predominantly used) for the sale of goods by retail or used for conducting a specified business.
Breaches and Termination
Both parties to a commercial lease have obligations that they must fulfil during the term. The failure to comply with some of these terms is such a serious breach of the lease that the other party can terminate the lease and sue for damages.
There is a specific process that a landlord must follow to bring the tenancy to an end, and a tenant must be given a reasonable period to make good the breach.
Leasing disputes can arise when the parties do not fully comprehend their rights and responsibilities under the lease agreement, or the agreement is poorly drafted with unclear or absent terms. Alternatively, disputes often arise due to financial pressures, for example, when a tenant is unable to meet its obligation to pay rent.
As with all other aspects of commercial tenancies, an experienced property lawyer may be able to negotiate an outcome that suits everyone, even if there has been a long history of conflict during the tenancy.
If you need assistance, contact one of our lawyers at [email protected] or call (08) 9336 6300 for expert legal advice.