Ten most common asked questions on lease documents

 

1. Do I need a lawyer?

Whilst there is no requirement that you need to engage a lawyer to assist you with reviewing your lease it is common practice as they can help advise you. The main things they will assist you with is:

a. Inform you of your rights and obligations;

b. Negotiate terms for you to ensure hidden costs in the leases are removed;

c. Ensure you comply with the relevant retail lease legislation so that you are not penalised; and

d.  Obtain the best terms possible for your lease.

 

2. If I sign an offer to lease but then decide not to enter into the lease, am I bound?

If the offer states the following essential terms of a lease:

a. The premises;

b. The start date and term;

c. The premises;

d. The parties (ie the tenant and landlord);

and does not state it is conditional upon signing the lease, then it is quite likely that you are bound even though no formal lease has been executed. Many offers to lease state “this offer to lease is conditional upon a formal lease being executed”, which means that the offer is non binding until the formal lease is signed.

 

3. When should I receive a draft lease?

As soon as the agent or landlord enters into negotiations with you. Generally, this should be supplied together with a Disclosure Statement.

 

4. Can I be liable for capital repairs within the premises?

No, you are not required to pay for capital items other than where you damaged the items or the premises.

 

5. Is the landlord liable for capital repairs within the premises?

Unless the lease stipulates otherwise, the landlord is not liable for such repairs. The landlord is however required to ensure the premises is structurally safe and suitable for occupation.

 

6. Can the landlord call upon a bank guarantee without notifying me?

Unless otherwise stated in the lease, the landlord can obtain the funds in your bank guarantee without first notifying you if they are entitled to the monies.

 

7. If I exercise my right of renewal a few days late, has my right of renewal been lost?

The lease will stipulate how a lease is to be renewed. Generally, it will state the following:

a. The first date the option can be exercised;

b. The last date the option can be exercised;

c. The way you must give notice to the landlord to exercise your option. This will state what type of service is authorised eg “you must mail the notice to the registered address of the landlord”. Do not presume you can give notice via email if the lease does not allow it; and

d. If you can still exercise your option even if you have been in default under the lease. Be careful as some leases do not allow the option to be exercised even if you have done one minor breach under the lease. Disadvantageous terms such as this should be negotiated out of your lease prior to execution.

 

8. Can I assign (transfer) my lease to someone else?

The lease will outline what assignment pre-conditions apply. Each state in Australia also has the provisions outlining how you can assign the lease. For example, in NSW a landlord may withhold consent to the assignment if:

a. the assignee proposes to change the use to which the shop is put;

b. the assignee has financial resources or retailing skills that are inferior to you;

c. you have not complied with the procedure for obtaining consent to assignment eg providing a disclosure statement to the proposed assignee and providing the landlord with such information as the landlord may reasonably require concerning the financial resources and retailing skills of the proposed assignee; and

d. in the case of a lease awarded by public tender, the assignee fails to meet any criteria of the tender.

 

9. Can a landlord refuse to consent to a sublease?

Unless the lease document provides otherwise, the landlord can refuse to consent to a sublease and can do so unreasonably.

 

10. Can the landlord charge you for its legal costs for drafting the lease?

No. It is possible however, for them to  charge for any legal costs associated with changes made to the lease.

It is always advisable to seek legal advice from a lawyer specialising in leases prior to entering into a lease as this will help save you money in the long run and allow for a lease to be agreed on terms favourable to you.