Retail leases in Victoria: 4 things to know before you sign

Don’t sign a retail lease before knowing these facts first

If you are entering into a retail lease it is important to know all your rights ahead of time. A retail lease is an important, enforceable and legally binding document. It’s a good idea to seek out advice from an experienced lawyer who specialises in leasing law before you sign anything.

However, by thoroughly understanding these four considerations, you will gain the confidence to engage in lease negotiations. You’ll also know how to speak to your lawyer about your retail lease if you choose to engage one.

1. When have you legally entered into a retail lease?

A lease is entered into when:

  • the tenant takes possession of the premises, or
  • the tenant begins to pay rent, or
  • the lease is signed by both the tenant and landlord.

A tenant should not do any of these things unless they are completely happy to go ahead with the lease.

Read: Retail lease and commercial disputes 

2. What is your landlord legally obligated to do when entering into a retail lease?

When a landlord and tenant begin to negotiate the terms of a lease, the landlord must give the tenant a Victorian Small Business Commission information brochure about retail leases as well as a proposed lease (at this stage the copy of the lease does not need to contain the rent or term).

Later, at least 7 days before entering into a lease, landlords must give a retail tenant a disclosure statement and the completed proposed lease. A disclosure statement also needs to be given to a tenant when a lease is being renewed.

A disclosure statement includes important financial information. This includes rent, outgoings and other obligations. If you are a tenant, make sure you look carefully at the details of this disclosure statement as it may have a big impact on the viability of your business.

Read: Lease a business premises 

3. Make sure to check these important features of your retail lease before signing!

A retail lease deals with many matters.  Make sure the following features are acceptable to you:

  • the term of the lease and options to renew
  • the amount of the commencement rent and the nature, frequency and amount of rent reviews
  • the dates of exercise of any option(s) for further lease terms
  • outgoings and other occupancy costs
  • permitted use of premises
  • make good at end of lease
  • assignment of lease

Read: Understand a lease agreement 

4. Some State Government requirements override retail leases

The Retail Leases Act contains requirements that override a lease such as requiring landlords to:

  • repair and maintain premises
  • provide annual estimates of outgoings
  • pay for lease preparation and costs of complying with the Act
  • give reminder notices about lease options and renewals

Retail leases are incredibly important for any retail business and shouldn’t be taken lightly. Any retail business owner should read a lease back to front before signing. It’s also important to seek out legal advice if there’s anything in a retail lease you’re unsure of.

This simple retail lease fact sheet helps tenants understand their rights and responsibilities. It includes an easy to read checklist to guide you through what you need to understand and what you should look out for.

For more information on your rights and responsibilities as a tenant or landlord you can visit the Victorian Small Business Commission website.

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Mark Schramm

Senior Manager | Dispute Resolution Services, Victorian Small Business Commission

For more information on your rights and responsibilities as a tenant or landlord you can visit the Victorian Small Business Commission website.