Retail Leases: Free passes and loopholes.
Walking around my local area in Crows Nest I see empty shops with ‘For Lease’ signs in the window. Each of these represents an ending and a new beginning. An old business has moved out, and a new business is about to find a new home. They are not always happy stories.
Not all new businesses succeed. When this happens, the priority turns to cutting losses and this includes breaking the Lease. Retail Leases (the type that apply to shops) are difficult to break without penalty. As with all legal contracts, there are loopholes. With Retail Leases, the loopholes are contained in the legislation, not the Lease itself.
The Retail Leases Act 1994 contains a number of rules that both the Landlord and Tenant must comply with. If they don’t, privileges are often granted to the other party, depending on whether you are the Landlord or the Tenant. Such privileges may include:
Many Landlords, Tenants, Agents and even Solicitors are not fully aware of these provisions. In most cases, if you fail to comply with the letter of the law, then the other party to the transaction gets a free pass. They relate to things like the documents that must be given to the other party, and time limits.
Although all these rights and privileges are bestowed by legislation, not everyone can make use of them. And being aware of them is crucial to exercising your rights. No one is going to remind you, especially not the other party in the transaction.
So how do you get out of a lease? Take action immediately when you decide you need to. The legal timeframes for getting things done are short. If your landlord or tenant has handed you a free pass, then it is normally essential to act on this quickly. If not, it will be a matter of going through the lease with a fine tooth comb looking for loopholes...