The legislation to amend the Retail Shop Leases Amendment Act was finally passed this week, after years of consultation and process. The amendments to the Act take effect in 6 months time, meaning that Lessors and Lessees must ensure they are across the new requirements by this time.
The key changes to rights and obligations of Lessors and Lessees are set out below.
Lessor Disclosure Period
The Lessee will now have the ability to waive the 7 day Lessor Disclosure period, subject to the following requirements:
Disclosure Upon Lease Extensions
Presently under the Act when a Lessee exercises its option to extend the term of the Lease, the parties are not required to provide each other with disclosure. Under the amendments, parties must now give each other disclosure at such time.
Within 7 days of the Lessee exercising its option to renew the Lease, the Lessor must provide the Lessee with a Lessor Disclosure Statement. Within 14 days of the Lessee receiving a Lessor Disclosure Statement, the Lessee may elect to withdraw its renewal notice and effectively undo the exercise of its option. The only exception to the Lessor needing to give the Lessor Disclosure Statement is if the Lessee provides the Lessor with a waiver notice at the time of exercising its option.
In the event that the Lessor does not comply with the above disclosure obligations, then a Lessee may terminate the extended Lease within 6 months.
Exclusions to the Act
The following additional exclusions to the Act will now apply:
Monetary Related Matters
The following cost related changes will apply under the amended Act:
Legal and Other Fees
Upon an assignment of a Lease, the Lessee and its guarantors will be released from liability from the assignment date, provided that all parties have complied with their respective disclosure obligations. This amendment clarifies the previous uncertainty under the Act as to whether or not guarantors were released from liability in such circumstances.
Where a Lease imposes refurbishment obligations on the Lessee, such Lease provisions will be void unless they specify the general details of the nature, extent and timing of the refurbishment.
The above changes are set to come into effect in 6 months’ time. Parties to retail leases should use this time to ensure that their leases are compliant and that they have the necessary data and information available to ensure compliance with disclosure obligations and monetary related matters.
Please contact our property lawyers if you would like further information on leasing and your rights and obligations under the amendments.
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