Retail and commercial leases

    areas we work in

    We act for both landlords and tenants.
    Significant issues which tend to arise are

    Tenants
    Landlords

    Tenants

    When a prospective tenant is about to enter into a lease, it is essential that they obtain legal advice as to the legal effect of the proposed lease. Issues and traps include rent reviews, options to renew, and repair obligations. Often our task involves negotiating the terms of the lease with the solicitor for the landlord to obtain the best position reasonably possible. Overlaying and overriding all provisions of any retail lease is the Retail Leases Act 2003 – it is critical that a tenant understand the extent to which the Act does and does not protect them. (See below).

    An aspect which is easy to overlook is the need to ascertain whether the proposed business is under planning law permitted to operate as of right, or whether a planning permit is required. It is equally important to check out various aspects of the building, including its physical condition and whether an occupancy permit has issued for it.

    Landlords

    It is the solicitor for a landlord who prepares the lease as well as the disclosure statement required by the Retail Leases Act. The lease must accurately reflect the commercial deal struck between the parties, be clear and must not breach the Act or any other law. The landlord, perhaps even more that than the tenant, needs to understand how the Act will apply in their particular case. Otherwise the landlord may well find that an important provision in the lease which he has bargained hard for, and for which he has given concessions in return, is in fact unenforceable.

    Both landlords and tenants will generally need to be advised as to critical dates to diarise, including renewal deadlines (and the landlord’s obligation to give notices about those) and rent reviews.

    Retail Leases Act 2003 – This Act in many respects tilts a retail lease in favour of the tenant, including as to:

    • the requirement, at the beginning of the lease, to hand the tenant a detailed disclosure statement, effectively summarising the lease and providing details of fixtures and fittings provided by the landlord;
    • a minimum five year term;
    • procedures to be followed with respect to security deposits;
    • the requirement for a landlord to warn the tenant of an impending lease renewal deadline;
    • the banning of mechanisms designed to prevent the rent from falling on a market review date;
    • preventing the landlord from recovering certain outgoings, including land tax and capital costs;
    • requiring a landlord to give an annual estimate of outgoings;
    • critically, imposing on a landlord the obligation to maintain the structure of the premises, the fixtures and fittings owned by the landlord and fixtures and fittings relating to services provided by the landlord. This often overlooked section also provides for the ability, a tenant, provided they follow a set process, where the matter is urgent and having a significant impact on the business, to carry out a repair and recover the cost from the landlord
    • limiting the circumstances under which a landlord may refuse their consent to an assignment of the lease – applicable where the tenant for example sells their business;
    • requiring a landlord, when the end of the lease is coming up, to advise the tenant officially whether or not a new lease will be granted.