Retail leasing – Changes to legislation in NSW
Moray & Agnew Lawyers
The Retail Leases Amendment (Review) Act 2017 No. 2 (NSW) (the Act) was assented to on 1 March 2017 and significantly amends the Retail Leases Act 1994 No.46 (NSW) (RL Act).
The Act was the result of statutory review and considerable discussion between the NSW Government and retail industry bodies following the release of a discussion paper, “2013 Review of the Retail Leases Act 1994” which identified a number of issues within New South Wales’ retail leasing regime.
The purpose of the Act is to amend the RL Act to:-
● improve the standard of conduct of both the Lessor and the Lessee;
● implement protection mechanisms to reinforce certainty of negotiated lease terms; and
● clarify the existing processes for efficient operation of retail leasing in NSW.
The key amendments to the RL Act are as follows:
• Lessor Disclosure Statement: The Act amends the prescribed disclosure form to simplify the procedure. Lessors must make full disclosure of the Lessee’s obligations in a Disclosure Statement, including the Lessee’s contribution to outgoings which cannot be recovered if such outgoings are not clearly disclosed.
• Lessee’s right to compensation: The Act allows for a Lessee to be compensated for reasonable costs incurred (such as fit-out costs) where a Lessee terminates due to failure by the Lessor to provide a Disclosure Statement within the first 6 months of a lease term or where the Disclosure Statement is false or incomplete.
• No minimum term: The requirement for a Lease to be a minimum term of 5 years (allowing for short term leases less than 5 years) has been removed.
• Registration of Lease: A Retail Lease must be registered if it is for a term of 3 years or more and a Lessor is obliged to lodge the Lease for registration within 3 months of return of the executed Lease by the Lessee. (The Act permits some delays such as delay due to obtaining the mortgagee’s consent or requirements arising under the Real Property Act 1900 that are beyond the control of the Lessor).
• Executed Lease issued to Lessee: A copy of the executed Lease must be provided to the Lessee within 3 months (instead of 1 month) of the executed Lease being returned to the Lessor.
• Bank Guarantee: A Lessor is required to return a Bank Guarantee to a Lessee within 2 months after the Lessee has performed all of its obligations under a Lease.
• Jurisdiction Limit: The monetary limit for claims arising under the Act within the jurisdiction of the Civil and Administrative Tribunal has been increased from $400,000 to $750,000.
• Mortgagee consent expenses: A Lessor is no longer entitled to recover expenses to obtain a mortgagee’s consent to a Lease from a Lessee.
• Demolition of Premises: Termination of a Lease due to a proposed demolition will only be permissible when demolition requires vacant possession of the Premises.
• Exclusion of uses: Leases for certain uses of a Premises have been excluded from the Act. Some of those uses include ATMs, vending machines, communication towers, public telephones, children’s ride machines, internet booths and self-storage uses.
• Agreements for Lease: The Act will apply to Agreements for Lease in the same way it applies to Leases (where relevant).
• Market rent determinations: A party may apply to the Registrar of Retail Tenancy Disputes to appoint a specialist retail valuer to determine the current market rent of a Premises.
• Permanent retail market places: The Act applies to permanent retail market stalls which are defined as an “assemblage of stalls, styled or described as a market operating in a permanent building or other permanent structure.
Further information about the changes to the RL Act can be obtained from Fiona Nelson (Partner) and Tina Kealy (Associate) of Moray & Agnew Lawyers on (02) 4911 5400 or email firstname.lastname@example.org