Retail Leases Amendment (Review) Act 2017

The Retail Leases Amendment (Review) Act 2017 (NSW) was assented to on 1 March 2017. Although the date of commencement is still to be appointed, it is important to understand the key changes to the Retail Leases Act 1994 (NSW) now.

 

Retail Leases Act 1994 (NSW)

Changes to the Act

Impact

Section 11

(1) Requires a lessor to give a lessee a disclosure statement for a lease at least 7 days before the lease is entered into.

(2) If a lessee is not given a disclosure statement or the disclosure statement is incomplete or materially false or misleading, the lessee can terminate the lease at any time within 6 months after the lease was entered into (unless subsection 3 prevents termination).

The subsection has been substituted to simplify the provision, clarify the lessor disclosure statement requirements and to include the penalty previously located in section 11(6).

A new subsection 11(2A) has been inserted allowing a lessee to recover compensation from the lessor for items such as costs reasonably incurred for entering into the lease including compensation for expenditure in connection with the lessee’s fit-out.

Greater clarity of the requirements for a lessor’s disclosure statement and the penalty for non-compliance.

A lessee will be entitled to compensation if a lease is terminated as a result of a lessor failing to provide a valid disclosure statement before the lease is entered into.

Section 11A(1)

A lessee is required to provide a lessor with a disclosure statement no later than 7 days after receipt of the lessor’s disclosure statement.

The subsection has been substituted to simplify the provision, clarify the lessee disclosure statement requirements and to include the penalty previously located in section 11A(3) which has been repealed.

Greater clarity of the requirements for a lessee’s disclosure statement and the penalty for non-compliance.

Section 12

A provision of a lease requiring a lessee to pay or contribute towards the cost of finishes, fixtures, fittings, equipment or services is void if the liability was not disclosed in the lessor’s disclosure statement.

A new Subsection (2) has been inserted clarifying that section 12 does not apply to outgoings.

A new section 12A has been inserted which limits a lessee’s liability for outgoings to those disclosed in the lessor’s disclosure statement.  If a lessor’s disclosure statement provides an estimate and there was no reasonable basis for it, the lessee’s liability for the outgoing will be limited to the estimate.

A lessor will be required to accurately estimate outgoings  to ensure a lessee has greater clarity of the amount of outgoings payable.

Section 15

A lease is taken to include a provision requiring a lessor to:

  • provide a lessee with an executed copy of the stamped lease within 1 month of the lease being returned to the lessor after stamping; and
  • if the lease is to be registered, to lodge the lease for registration within 1 month of the lease being returned after stamping and provide the lessee with a stamped and registered copy of the lease within 1 month after it is returned after registration.

The section has been substituted to provide that a lease is taken to include a provision requiring a lessor to provide a lessee with an executed copy of the lease within 3 months of the lease being returned to the lessor following execution by the lessee.

An increase in the period within which a lessor must provide a lessee with a signed copy of the lease.

Section 16

The term of a retail shop lease together with any further term(s) must not be less than 5 years.  If a lease is entered into in contravention of this section the term of the lease will be extended to prevent the lease contravening this section unless a certificate has been given within 6 months of the lease being entered into, by a solicitor or conveyancer not acting for the lessor, explaining the effect of this section.

This section has been repealed and replaced with a new section requiring a lessor to lodge a lease for registration within 3 months of the lease being returned to the lessor following execution by the lessee if:

  • the lease together with any further term is for more than 3 years; or
  • the parties have agreed that the lease is to be registered.

A retail lease may be for a term of less than 5 years.

A lessor will be required to promptly attend to registering a lease where the term is for more than 3 years or the parties have agreed the lease is to be registered.

Section 16BA

Not applicable.

A new section has been inserted requiring a lessor to return a bank guarantee to a lessee within 2 months of the lessee completing its performance of the obligations under the lease for which the bank guarantee was provided as security.

A lessor will be required to promptly return a bank guarantee at the end of the lease term if a lessee has complied with the end of term obligations under the lease (such as vacating and making good the premises).

Section 20(1)

For the purposes of a lease that relates to the determination of rent by reference to “turnover”, subsection (1) sets out what is not to be included as turnover.

Subsection 20(1)(m) has been inserted to provide that the revenue from online transactions is not included as “turnover”, except for online transactions where the goods or services are delivered or provided from or at a retail shop (or the retail shopping centre of which the shop forms part) or where the transaction takes place while the customer is at the retail shop.

The determination of turnover rent under a retail lease will not be able to include revenue from transactions conducted online by a customer if the goods or services are delivered from a distribution center or warehouse and not from the retail store.

Section 47

Not applicable.

A new section has been inserted preventing a lessee from being required to provide a lessor with information concerning the turnover of the lessee’s business that is turnover from online transactions unless the goods or services are delivered or provided from or at a retail shop (or the retail shopping centre of which the shop forms part) or where the transaction takes place while the customer is at the retail shop.

A lessor will not be entitled to request information concerning turnover of a lessee’s business in relation to transactions conducted online by a customer if the goods or services are delivered from a distribution centre or warehouse and not from the retail store.

This is not a complete list of the amendments that have been made to the Retail Leases Act 1994.  For more information and details please contact our office.