The Retail Leases Act 1994 in New South Wales will be significantly changed now that both Houses of Parliament have passed the Retail Leases Amendment (Review) Bill 2016. Lessors and lessees should be aware of these changes in order to be prepared for when these changes take effect.

The date for these provisions taking effect is yet to be proclaimed but the major changes are the following:

  • to confer a right of compensation on a lessee who terminates a retail lease during the first six months

  • to change the definition of outgoings and require the lessor to give a full disclosure in the Disclosure Statement of all outgoings, otherwise the landlord cannot recover undisclosed outgoings

  • to mandate registration of leases that are for a term of more than three years, and to require lodgement for registration within three months of execution

  • to exclude certain premises from the Act, including ATMs, vending machines, various booths, children's rides and stalls in a market (except a permanent retail market), and to clarify that an office tower built on top of a retail shopping centre is not covered by the Act

  • to provide that, when determining turnover rent, turnover from online transactions (with very limited exceptions) are excluded

  • to make it clear that the landlord is responsible for mortgagee consent and production fees with regards to retail leases

  • to require bank guarantees to be returned within two months after the lessee has performed all obligations

  • with regards to termination due to demolition, to clarify that this is only allowed where demolition requires vacant possession of the shop

  • to clarify that the Tribunal can order amendment of a lease to correct a mistake so as to give effect to the intention of the parties

  • to remove the requirement of a five year minimum term for retail shop leases

  • to clarify that a tenant has no liability to a landlord after the lease has been assigned in accordance with the provisions of the Act

  • where a lease has been granted pursuant to tender, to give the landlord the right to refuse an assignment where the assignee does not meet the criteria set out in the tender

We will send out a notification once the amendments have been proclaimed and a commencement date for them coming into effect is known.

However, we believe that it was important to make you aware of these impending, important changes immediately to enable you to plan your business activities in the retail space moving forward.

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2024.

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