TESTING

What is a retail lease?

A business will usually operate under a "retail lease" agreement or a "commercial lease" agreement. While retail leases are subject to legislation that provides safeguards to the tenant, commercial leases are less regulated. It is accordingly important to know whether or not you are entering into a retail lease.
While a retail lease is defined differently in each State or Territory, typically they are:
  • Located within a shopping centre (this is often a deciding factor—e.g. an accounting business operating out of a shopping centre may be a retail business, while one operating out of commercial office space would not);
  • Used predominantly for selling goods or services to the general public or ultimate consumer and have a shop front.
There are several exceptions to what is considered a retail lease. Most states exclude premises if:
  • The lettable area exceeds 1,000 square metres.
  • The lease is for less than 6 months or over 25 years.
The retail lease legislation provides some safeguards for tenants but leaves many important issues to be resolved by the lease's terms. LeaseProbe provides tenants with information on the important issues which might not be covered by the lease.
Each State and Territory has its own retail lease legislation, and there are small differences between them all. Below is a list of the relevant Acts:
  • Leases (Commercial and Retail) Act 2001 (ACT)
  • Retail Leases Act 1994 (NSW)
  • Business Tenancies (Fair Dealings) Act 2003 (NT)
  • Retail Shop Leases Act 1994 (QLD)
  • Retail & Commercial Leases Act 1995 (SA)
  • Fair Trading (Code of Practice for Retail Tenancies) Regulations 1998 (TAS)
  • Retail Leases Act 2003 (Vic)
  • Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA)

The key protections afforded by these legislations relate to disclosure obligations, fees and compensation, unconscionable or misleading and deceptive conduct and assignment/termination of the lease.