Why You Should Always Have a Lawyer Review Your Retail or Commercial Lease in Queensland

Entering into a retail or commercial lease is a major business decision. For many businesses, the lease will be one of their largest ongoing financial commitments, and one of the longest-running contractual relationships they will have.

Yet it is surprisingly common for business owners to receive a lease from a landlord or agent, skim through the document, negotiate the rent, and sign without obtaining independent legal advice.

That can be a costly mistake.

A commercial lease is not simply a document that records how much rent you will pay. It can determine how much your premises will really cost, what you are responsible for repairing, how your rent can increase, whether you can sell your business, what happens when the lease expires, and what the landlord can do if your business experiences financial difficulties.

For Queensland business owners, having a lawyer review the lease before signing, taking possession or commencing to pay rent is one of the most important steps you can take to protect your business.

A lease is a long-term financial commitment

When negotiating a lease, business owners often focus on the headline rent.

For example:

“The annual rent $100,000.00 for the first year of the term”

But that may not be the true cost of occupying the premises.

Depending on the lease, the tenant may also be responsible for amounts such as:

• rent reviews;
• outgoings;
• council rates;
• water charges;
• insurance;
• cleaning;
• maintenance;
• repairs;
• air-conditioning costs;
• promotional levies;
• management fees;
• make-good costs and conditions;
• legal costs in certain circumstances; and
• other amounts permitted by the lease and applicable legislation.

A lawyer's job is to look at the entire financial and legal commitment. Leases will often have clauses in relation to critical aspects that will effect your business, such as; how is rent to be increased each year, make good requirements at the end of the lease, if you can assign your lease if you sell your business, redecoration clauses, what happens if you are in default of your lease, what if the landlord redevelops the premises, is a personal guarantee required and many more important aspects.

The lease you are given is usually prepared for the landlord

One of the most important things a prospective tenant should understand is that the landlord's lease has generally been prepared to protect the landlord's interests.

That does not mean the lease is unfair or unreasonable. It simply means that the document is not necessarily drafted with your business interests in mind.

Retail leases in Queensland have additional legal protections—and additional complexity

Retail leasing in Queensland is subject to the Retail Shop Leases Act 1994 (Qld) where the Act applies.

The legislation establishes mandatory standards and a dispute resolution framework for qualifying retail shop leases. Importantly, whether a lease is a "retail shop lease" is not necessarily determined by what the document calls itself. Whether the Act applies depends on the statutory definition, including matters such as the size and use of the premises and whether the premises are situated in a retail shopping centre.

This matters because the legislation can impose obligations and protections that may affect the rights of both landlords and tenants. Importantly, you will need to complete and receive from the landlord additional documents before signing your lease.

A lawyer can determine whether the legislation applies to your particular lease and advise you about its consequences and help with the process.

Before you sign, have a lawyer review it

At Grasso Searles Romano Lawyers, we assist Queensland businesses with retail and commercial leases, including preparing new leases for landlords, reviewing leases for tenants, lease renewals, assignments, variations and related property transactions.

We do not simply read the lease. We identify the provisions that may expose your business to risk, explain the practical consequences, identify issues that may need to be negotiated and help you understand the commitment you are about to make.

Thinking about signing a retail or commercial lease?

Don't sign first and seek advice later.

Send the proposed lease to Grasso Searles Romano Lawyers before you commit. A legal review now may help you avoid a much more expensive problem later.

Contact us on 07 3236 3999 or email us at reception@gsrlawyers.com.au and one of our dedicated lawyers will be able to assist you.

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