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Leases: Know Your Rights

Whether you are an existing tenant or entering into a new commercial, retail or residential lease, you should make it your business to know your rights; because your business may depend on it.

Commercial Leases

Commercial leases are applicable to a premise that are usually identified as a warehouse, office or industrial property.

Commercial leases that exceed a period of more than three years, need to be registered with the Land Registry Services. This obligation to register the lease is on the lessor (landlord) and there can be penalties if they do not comply with this requirement. Registering the lease means that a reference to the lease will appear on the title of the premises, giving third parties notice of your interest as lessee in the premises.

Retail Leases

A retail lease is applicable to premises that are used for the purpose of directly selling goods or services to the public. For example premises that are located within a shopping centre. The Retail Leases Act 1994, sets out the rules in relation to retail leases and contains a schedule of the type of business that are covered by this legislation.

Similar to a commercial lease, retail leases that exceed a period of more than three years, need to be registered with the Land Registry Services.

What are some of the key differences between commercial and retail leases?

In retail leases, normally the cost of preparing the lease is borne by the lessor and this cannot be passed on to the lessee. Whereas in a commercial lease the landlord may require the lessee to pay for the landlord’s legal fees including the preparation of the lease as part of their agreement.

Under the Retail Leases Act, 1994 the landlord is required to provide the tenant with a disclosure statement at least seven days prior entering into a lease agreement.

In retail premises there are additional protections in place for unconscionable conduct concerning the lessor.

What are some of the benefits of registering your commercial or retail lease?

Once you register your commercial lease you will have a registered interest as a tenant on the property. In essence, this means that you will have certain protections under the law compared to if you did not register the lease. Here are some benefits of registering your interest as a commercial tenant:

An official record will be made of your interest in the property as a tenant.

In the event there is a competing unregistered interest against yours, your interest will generally take priority if your interest was registered first and you did not have any notice of the other party's interest.

When a lease is registered it will appear on the Title Search for a property so that lease will be recognised by any new owner.

As a tenant you may find it difficult to sell or transfer your interest if the lease is not registered.

If a mortgagee takes possession of the property, they will take possession subject to the registered interest of the tenant.

Residential Leases

If you are a residential tenant, you will have certain rights under the Residential Tenancies Act, 2010 and Residential Tenancies Regulation, 2019. A residential tenancy agreement is a legal and binding agreement that is entered into by the landlord and tenant. Although an oral tenancy agreement may still be found to be binding in certain circumstances, it is always better to have a written tenancy agreement.

Why should we have a written tenancy agreement?

In New South Wales, most dealings relating to land are required by legislation to be in writing.

A written agreement shows that there has been consideration and acceptance by the parties, which is a foundation of contract law.

A written agreement is easier to enforce in court.

A written agreement sets out all of the terms of the agreement, which leaves little room for ambiguity.

It is important that the agreement follows the Residential Tenancies Act, 2010. The Act states that a landlord is required to use the standard terms that are set out in the Residential Tenancies Regulation, 2019. Generally, these standard terms cannot be varied.

If you need assistance with your lease or other property matters, as always feel free to contact us.

Christine Nader, Senior Associate

and Tugce Zaman, Solicitor

Gramelis Attorneys

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