Sorting out a commercial lease or a commercial lease dispute can be complicated, but with the right advice – it doesn’t need to be.
In Queensland, there is no such thing as a ‘standard commercial lease’. Different laws and conditions apply depending on the type of business operated at the premises, location of the premises and the length of the tenancy.
It is important for both tenant and landlord to understand and agree to the conditions of a commercial lease and understand their rights and obligations under the lease. A lease that is clearly worded, and seeking advice on any unclear terms and conditions are key in helping parties avoid any ambiguity and will aid in minimising disputes.
While a lease may seem straightforward, they often give rise to confusion, particularly in respect of renewals, rent increases, rights and obligations. The first step to understanding your lease, is to know what type of lease you require or hold, such as a retail shop lease or non-retail shop lease.
Retail Leases
A retail lease is essentially a lease for a retail shop, such as a hairdresser, clothing or grocery store. The Retail Shop Leases Act (Qld) 1994 (‘Retail Act’) applies to these type of tenancies and cannot be contracted out of. Circumstances where the Retail Act will not apply to your lease, even if you operate a retail business are:
- Service stations;
- Leased premises which has a floor area in excess of 1000m sq and is leased by a listed corporation/listed corporation’s subsidiaries;
- The lease relates to a temporary business i.e. Trade stalls;
- The premises are leased from the South Bank Corporation with perpetual leases or leases for more than 100 years; or
- The premises are within a theme park or amusement park.
Non-Retail Leases
These leases may include premises for professional services, warehouses, distributors and manufacturers which might be operating a commercial enterprise.
What are key considerations when forming a lease?
When preparing or reviewing your lease, whether as the lessee or lessor, you should give careful consideration to the following:
- Term/tenure – length of lease, options to renew, whether the lease needs to be registered on the Title of the property;
- Security – personal/bank guarantees;
- Letter of Offer/ Intent / Agreement to Lease – do you have an understanding of their terms, your obligations and rights?
- Gross Lease or Net Lease – Are there any outgoings not included in the rent?
- Insurance – What insurance does the lessor take out and what does the lessee need to take out?
- Assignment – is the tenant and the guarantors “off the hook” if the lease is assigned?
Disputes
There are many ways in which you may find yourself in a lease dispute. Common examples of disputes that arise are that of:
- damage to property;
- failure to pay rent as agreed;
- failure to maintain the property or return to the state as required;
- subleasing / assignment of the lease.
What If I’m involved in a lease dispute?
Depending on the type of lease and the issue, there is legislation to assist in resolving a lease dispute (such as the Retail Act or the Property Law Act 1974 (Qld)). There are several avenues available to resolve a lease dispute, such as:
- Notice to remedy breach (if applicable);
- Termination of lease (if applicable);
- Mediation; or
- Commencement of Proceedings in QCAT or Court depending on the type of dispute and type of lease.
Next Steps
Leases can be a complicated legal issue to navigate, and it’s one that could cost you significantly if you get it wrong. Whether you are considering entering a lease, are currently involved in a dispute or would like to know what your rights and obligations are at the first sign of a hiccup – get in touch with one of our litigation lawyers today. Klein Legal are litigation and dispute experts and can assist you in avoiding a potential dispute or resolving a dispute by getting the right advice.
This is general information only and does not constitute legal advice.
If you or someone you know would like more information or require advice about anything raised in this article, please contact us on (07) 5458 6855 or email mklein@kleinlegal.com.au.