Commercial and Retail Leases

Whether you are a landlord or a tenant of the lease of a commercial and/or retail space, it is essential to make sure that you do not enter into a lease without proper legal advice.

Elringtons has a number of experts in Commercial and Retail leasing across the ACT and NSW.

Services for Landlords

We can provide landlords with a broad range of commercial leasing services, including preparing and registering new leases (including dealing with your bank for consent), negotiation with tenants, contentious disputes, or a broad range of transactional matters.

Lease Preparation and Negotiation

Every lease is unique. Its terms will depend on where the land is located, the nature of the tenant, and the terms of the agreement you’ve reached. Some matters, among others, which might require special attention include:

  • The method of rent review you will be using (such as fixed percentage increases, CPI reviews, or market reviews)
  • Whether you will be recovering outgoings such as rates, levies, or other costs from the tenant, and whether you will be recovering all outgoings, a percentage, or increases above a base year.
  • Whether the Retail Leases Act 1994 (NSW) or the Leases (Commercial and Retail) Act 2001 (ACT) apply to your lease, and if so, whether these provisions place any further obligations on you.
  • Whether you will be leasing or licensing Car Parking Spaces in addition to the premises.
  • Whether you will be providing the tenant with any Lease Incentives, such as a rent-free period or a cash contribution to the tenant’s fitout.
Contentious Lease Disputes

The laws surrounding commercial and retail leasing are complex, and it can be easy for disputes to arise for a great many reasons.

If a dispute arises with your tenant, we can assist you by helping you resolve the dispute in the most efficient and cost effective manner possible. In the ultimate extreme case where you need to terminate your lease and evict a tenant, we can assist you by preparing court documents and representing you in any proceedings.

Lease Variations

Are the parties to a lease seeking to change the terms tothe lease before it expires? If so, it is important to document the agreedvariation to the lease. Without doing so, the variation may be invalid, or ambiguous. This can create costly and difficult problems in the future.

We can assist with the review or preparation of Deeds of Variation to ensure that any variation to the terms of your lease is valid, binding, and clear.

If you are considering varying your lease at the tenant’s request, your legal costs in varying your lease may be payable by your tenant in certain circumstances.

Transfers of Leases
Most leases provide for a strict procedure around the transfer of leases. Further, the right to transfer a lease may be affected by State or Territory legislation.

Your tenant will likely need your consent to transfer their lease. This consent should be documented, and appropriate due diligence should be conducted on the incoming tenant to make sure the new tenant is going to be able to perform the lease.

Your legal costs in considering and consenting to a transfer of lease may be payable by your tenant in certain circumstances.

Subleases or underleases
Your tenant may approach you for consent to sublease or underlease part of their premises to another person. If so, you will need to ensure that the process is appropriately documented, and that the sublease to the new subtenant doesn’t prejudice your own rights under your lease.

Often, a Deed of Consent to Sublease (or Underlease) is prepared (and usually at the tenant’s cost), which sets out the nature of the relationship between you, your tenant, and the subtenant.

Your legal costs in considering and consenting to a request for a sublease or underlease may be payable by your tenant in certain circumstances.

Surrenders of Lease
Sometimes, by mutual agreement, a Landlord and a Tenant may decide to part ways before a lease has expired. If so, it is important to record the early termination (or “Surrender”) of the Lease.

To ensure clarity and certainty, it is usually the procedure for the parties to a lease to enter into a Deed of Surrender of Lease in these circumstances. This helps the parties to avoid future disputes and to clear the registration records (if the Lease is registered on the title to the land). This is particularly important, as a failure to remove a lease from title can make it hard for you to find a new tenant. This is because most prudent tenants will refuse to sign a lease for a commercial premises if the title to the land shows those premises as being leased to someone else.

Services for Tenants

We can provide tenants with a broad range of commercial leasing services, including reviewing and providing clear and concise advice on leases, advising on your obligations and entitlements as a tenant, undertaking due diligence, lease negotiations, representing you in contentious lease disputes, and assisting in transactional leasing matters.

Lease Negotiation
Each tenant is unique, and each parcel of land is unique – there is no such thing as a “standard lease”.
Understanding a commercial lease requires more than just reading it. Your rights under the lease will often be affected by legislation, or by other interests affecting the title of the land being leased (such as mortgages or superior leases.

We take a pragmatic, individualised approach to every lease, and make sure you don’t just understand your lease, but that your lease is right for you and your circumstances.

Contentious Lease Disputes
The laws surrounding commercial and retail leasing are complex, and it can be easy for disputes to arise for a great many reasons. If a dispute arises with your landlord, we can assist you by helping you resolve the dispute in the most efficient and cost effective manner possible.

In the ultimate extreme case where your landlord is threatening to terminate your lease and evict you, you need to be mindful that very strict and very short timeframes can apply for you to oppose any termination action (and you usually need to do so formally through the Court.

Lease Variations
Are the parties to a lease seeking to change the terms to the lease before it expires? If so, it is important to document the agreed variation to the lease. Without doing so, the variation may be invalid, or ambiguous. This can create costly and difficult problems in the future.

We can assist with the review or preparation of Deeds of Variation to ensure that any variation to the terms of your lease is valid, binding, and clear.

Transfers of Leases
Most leases provide for a strict procedure around the transfer of leases. Further, the right to transfer a lease may be affected by State or Territory legislation.

It is important that you follow the correct steps in transferring your lease. If you don’t follow the correct processes, the lease may not be formally transferred, or you may even be in breach of your lease. If this happens, you may be required to compensate your landlord. You might also create significant delays to the transfer of the lease – which can hold up other transactions you might be engaged in (such as the sale of a business, or a new lease somewhere else), or delay the return of your bond.

Subleases or underleases
If you are a tenant, it is important that you follow all the same steps as a Landlord would when entering into a new lease, including preparing documents and conducting due diligence. You’ll also need to comply with the terms of your own lease before you sublease or underlease part of your premises to another person. Otherwise, you may find yourself in breach of your lease, and your landlord may even be entitled to terminate the lease. If this happens, not only will you have breached your lease with your landlord, but you may have also breached your sublease with your own tenant.
Surrenders of Lease
Sometimes, by mutual agreement, and Landlord and a Tenant may decide to part ways before a lease has expired. If so, it is important to record the early termination (or “Surrender”) of the Lease.

If you are a tenant, you will want to make sure that the surrender is documented. Otherwise, there may be uncertainty as to whether you are formally surrendering the lease, or abandoning the premises. This could leave you open to being sued by your landlord for breach of lease or for unpaid rent. Further, if the Landlord sells the premises while your lease is registered on title, or the landlord’s bank forecloses on the property in the belief that your lease remains current, the landlord or their bank might pursue you for breach of lease or unpaid rent.

Do you need assistance with your NSW or ACT Commercial or Retail Lease? Submit an enquiry, or call Elringtons and ask to speak to our Commercial Leasing Team today for a short, obligation free discussion about your lease and the services we can offer you. For information about specific Retail and Commercial Leasing issues, consider visiting our Commercial Leasing Blog.