lease Tag

[caption id="attachment_15312" align="alignnone" width="300"] Leasing in Queensland[/caption] Retail Shop Leases The Retail Shop Lease agreement between the landlord and tenant is not the only thing that the parties must consider in their relationship. The Retail shop Leases Act overrides the terms of the lease. The laws relating to...

Do you lease premises for your business? Many business owners do not realize that when they sell their business and assign their lease, they may remain liable to the landlord for many years after the assignment.  If the buyer (the new business owner) can't pay the rent then the landlord may come looking for the previous tenant to cover the loss.  Is that you?

Many leases actually provide that an assignment of the lease does not release the previous tenant from liability to the landlord. Don't despair!  Read to the end of this article where we make reference to some legislation that may assist if you are a retail shop tenant.

If you are a business that rents premises then you should urgently have a lawyer check to see if your lease is secure.

In some areas of Queensland small commercial landlords might be under strain and business owners may as a result lose their business.  Below we have set out the steps that you can take to make sure that your business is not affected. Unfortunately  many leases in Queensland are not protected as Section 66 of the Land Title Act has been ignored or forgotten.   If the landlord is put into insolvency or bankruptcy then the commercial tenants may be in serious trouble.

A bank wanting to sell business premises does not necessarily want to keep the business in place, particularly if they believe that they can get a better deal with the tenant gone. This may be so if a buyer wants to redevelop or renovate or the buyer wants to occupy the property themselves.  

A tenant may have  no legal right to complain, if a landlord is charging "unfair" rent which is well above the amount that a valuer might say is market rent.  The lease determines the rent that is charged.  In better times a deal may be struck between the landlord and the tenant.  Over time circumstances and the economy may change.  Rent is not however determined by the rental market at any particular time.  Rental is determined only by the lease. But there may be other things which a tenant can do.

You may have heard the saying. "A row is never about, what a row is about".  In other words when people argue with each other, they often argue about the things which did not cause their initial dissatisfaction.  Watch yourself in your next argument with your partner.  Does the focus of that argument keep changing?  It is the same in law.

A dilemma which often faces commercial and retail shop tenants in Queensland is whether or not they should register their Lease with the titles office.

It is common in practice for the Tenant to bear the costs of and incidental to the registration of the Lease. This can include the costs of having a Premises surveyed and plans prepared, lodgement fees and requisitions. This can all be a very costly process.

The question that often confronts a Tenant is: do the risks associated with not registering the Lease justify the initial costs of registration?

So what are the risks?

I attended a seminar held by the Franchise Council yesterday. The speakers were Ralph Edwards and Phillip Chapman of Lease 1. A link to their website is http://www.lease1.com.au/contact.html

There were a number of good points made which have caused me to consider the process of negotiating a lease. We suggest that you always obtain legal advice before proceeding to any negotiation. Here are some suggestions:

1. Pressure on a tenant builds as the date for renewal approaches. Tenants are well advised to begin negotiations relating to obtaining new lease at least 12 months before the current lease expires. Institutional landlords are very organized and actively plan how they can get the best deal for their shareholders. Landlords know that without the lease there is no business.  As the end date approaches, pressure mounts on the tenant, so that the business is not lost. The tenant has more options while a significant part of the lease term remains and so this is the best time for a tenant to negotiate.

Look at any shopping centre in Australia and you will notice that many of the shops across many different shopping centres are the same. We see from this, the huge popularity of franchising in Australia. The need for retail premises with each of these Franchised retail stores means that decisions need to be made about who controls the premises. Should the owner of the business (Franchisee) take a lease of the premises? This means taking the direct benefit and risk associated with the lease. If the Landlord has a complaint or needs to sue for performance of the lease the first point of contact would be the lessee. If the business owner or Franchisee signs the lease then they are personally and directly responsible to the landlord. Alternatively, should the Franchisor take the lease, and then give a licence to the franchisee? This means that the Franchisor is in control of the premises. The benefit for the Franchisor is that, if there is a falling out with the Franchisee or, the Franchisee leaves the business, there is no direct impact on the lease, provided that, the Franchisor continues to honour the Franchisors obligations under the lease. I should point out that generally a Franchisor will ask for an indemnity from the Franchisee in respect of all the obligations of the Franchisor written in the lease. This is done so that the franchisee shares the same risk as the franchisor, regardless of how the premises agreement is structured.