Our Gold Coast leasing lawyers act in all forms of real and personal property leasing and licensing arrangements on the Gold Coast and throughout the state of Queensland.
The laws relating to leasing (and in particular retail shop leasing) are the subject of constant change. With recent amendments to the Retail Shop Leases Act 1994 (Qld) our leasing lawyers are able to provide the client with current and real-world advice in relation to their requirements. We keep abreast of market trends so as to be able to advise our clients as to market and industry standards and expectations.
Our leasing lawyers also keep themselves informed of the latest developments in case law which can affect lease arrangements. As an example, QBM Lawyers successfully represented guarantors to a major commercial lease who had been sued for over $1,000,000 as a clawback of lease incentives, having the entire claim dismissed by the Supreme Court on the basis that the obligation to repay was void as a penalty. This was a decision of national significance to the practise of lease incentives.
Our leasing lawyers have extensive experience in leasing matters from which our clients benefit whether renting a small factory or being the landlord of a large retail shopping centre. Documents are tailored to the needs of the situation and the client.
Q I’m looking at leasing a small commercial premises to operate my business selling clothing. The agent tells me that I have to pay the landlord’s legal costs of preparing the lease. I will also have to pay my legal costs? Is this correct?
A Most commercial leases in Queensland fall into 1 of 2 basic categories:
- A non-retail commercial lease; or
- A Retail Shop Lease.
If the premises leased or the intended use of the premises are not captured by the Retail Shop Leases Act 1994 (Qld) (“RSLA”) such that it is not a “retail shop” then the RSLA does not apply. In this circumstance it is commonplace for the tenant to pay both the landlord’s and their own legal cost for the preparation of the lease.
If the premises or intended use is captured by the RSLA as a “retail shop” then the lease is a Retail Shop Lease. There are a number or circumstances or uses that result in the lease being a Retail Shop Lease. The upside to a Retail Shop Lease for the tenant is that the legislation is largely a consumer protection mechanism to attempt to protect small tenants from large powerful landlords. The other upside is that the legislation prohibits the landlord from passing on its legal costs of creating the lease to the tenant.
In our example above, even though the commercial premises itself may not be captured by the RSLA the intended use would be. Therefore, the landlord would be required to pay its own legal costs, and you have to pay your own.
You will need legal advice in relation to the lease and to give a certificate from the lawyer. Our Gold Coast leasing lawyers can assist.
Q As the tenant, do I have to pay all of the landlord’s outgoings like rates, water and land tax?
A Payment of outgoings can depend of a number of factors such as:
- · Is the lease a ‘Retail Shop Lease’?
- · Is the property being offered as a gross or net rental payment?
- · Does the landlord even pay these outgoings?
Under the Retail Shop Leases Act the landlord is prohibited from passing on certain outgoings to the tenant. For example, land tax and legal fees for the initial drafting of
the lease are not able to be passed on to the tenant. Otherwise, the tenant is usually liable for the outgoings on the premises unless the rental amount is a ‘gross’ amount which includes the outgoings, but usually not utilities. Contact our Gold Coast leasing lawyers for further information.
Q Should I pay a security bond or be a guarantor of the lease?
A This depends on the circumstances. Tenants which are company entities will often see the landlord requiring a guarantor as it may have little recourse against a corporate tenant in the event of default. Our leasing lawyers do see circumstances where some landlords will waive the need for personal guarantees if a higher security bond is paid, e.g an amount equivalent to over 6 months’ rent.
Whether a security bond is paid or the lease is guaranteed by an individual will depend on the desirability of the premises, the financial position of the proposed tenant, the landlord’s particular needs and/or the negotiation skills of the tenant, its agent and/or lawyer. A reasonable combination for a tenant which might have reduced resources at the outset of a lease is to propose personal guarantees which are cancelled if a particular amount is provided as a security bond.
As a landlord, special consideration should be given to whom is a guarantor and in what form the security is held. The security bond can be held by way of a cash deposit or bank guarantee. If held by a cash deposit, then consideration needs to be given to registering a security interest in the security bond monies on the Personal Property Securities Register (“PPSR”) so as to attempt to protect that cash security deposit from any liquidator or external administration of the tenant.
Our Gold Coast leasing lawyers can provide advice in relation to alternatives for lease security and their risks.
Q From a tenant’s perspective, should the lease be registered on the title of the property?
A In short, the answer is yes. Having said that, provided the lease term is for a total of less than three (3) years then an unregistered lease is protected under the Property Law Act short lease exemption, however the option might be at risk if the property is sold or a mortgagee takes possession. There are exceptions but as a general rule it is better to register the lease.
Usually it is the tenant who pays for the registration of the lease as the registration is for the benefit of the tenant. If the leased premises is only part of the property then it may be that a survey plan is required to make the lease capable of registration. Again, as it is the tenant who usually requires the registration of the lease, it will be the tenant who pays the survey costs. If you lease the whole of the property, a survey plan is not required for registration of the lease.
Q I have been asked by a landlord to sign a confidential incentive deed as part of the lease documentation. Should I?
A A number of landlords encourage the use of confidential incentive deeds where rent concessions or fitout contributions and the like are detailed. The most benign reason for this could be that it keeps the incentive confidential so that the lessor’s competitors do not match or exceed the incentives to draw propspective tenants away. The difficulty however is that there could be other, less commercial reasons at play. As examples, it might be to conceal the true value of the rent from other tenants, or valuers, or prospective buyers of the freehold. Our Gold Coast leasing lawyers have seen extreme examples of this practice attempted, where the lease (as a public document) will say one thing, but the effect of the incentive deed is quite another.
There are a number of potential risks to a tenant if they go into a transaction where third parties might be misled as to the true nature of the arrangements between the parties. Our Gold Coast leasing lawyers can advise of those risks and suggest alternatives to proceed.