Consider this if…
- You have been sent a lease and a disclosure statement and asked to sign
- You are taking premises for a shop, café, salon, clinic or similar
- You are not sure whether your lease is retail or commercial, and it matters
- Your lease is up for renewal or you are exercising an option
- You are being asked to give a personal guarantee or a bank guarantee
- You are selling your business and need to assign the lease
How it works
Send us the lease and the disclosure statement
Along with anything the agent or landlord has told you that is not in the documents. Tell us the date you have been asked to sign by.
Today
We work out whether the Act applies
This decides most of what follows. It turns on how the premises are used and the occupancy cost, and it changes your rights on term, outgoings, land tax and dispute resolution.
First thing we do
We read the lease against it
Rent and rent reviews, outgoings and the estimates you should have been given, term and options, permitted use, assignment, guarantees, make-good, relocation and demolition clauses, default and termination.
2–3 business days
You get our view in writing
What the lease commits you to, which clauses we would want changed, and which of them the Act may make unenforceable anyway.
With the review
We negotiate, if you want us to
Priced separately from the review, so you can take our advice and negotiate yourself if you would rather.
Quoted before we start
Fee
Quoted in writing before we start
GST inclusive
Excludes: Negotiation with the other side is quoted separately from the review.
Review and written advice is one piece of work. Negotiating the lease is another. We quote them separately so you can choose.
Turnaround
Our written view back to you within three business days.
The first question is which Act applies
The Retail Leases Act 2003 (Vic) applies to retail premises. Where it applies it overrides the lease, so a clause inconsistent with the Act may simply not work, whatever the document says.
Where it does not apply, the lease is your whole position. Nothing constrains what the landlord can ask for except what you negotiate.
That makes the classification question the most consequential one in the whole review, and it is not decided by what the lease is titled. It turns on how the premises are used, and it can change during a lease if the use changes. Leases above a set annual occupancy cost fall outside the Act regardless of use.
We have written about this at more length in our insights piece on whether you are a commercial or retail tenant, which sets out the tests. For a wider overview, see our complete guide to retail leases in Victoria.
What the Act gives you, in broad terms
Where the Act applies, you may have rights that are not in your lease:
- A disclosure statement and a copy of the proposed lease, before you sign
- A minimum term, unless a certificate has been obtained
- Limits on outgoings — including that certain charges cannot be passed to the tenant at all, and that estimates must be provided
- Constraints on rent review mechanisms
- Access to statutory dispute resolution through the Victorian Small Business Commission before proceedings
The detail of each of these matters more than the headline, and the way your lease is drafted determines how much of it you actually get. That is what a review is for.
What we look at in the lease itself
Rent and rent reviews. The starting rent, the mechanism for increases, and how often. Fixed increases, CPI, market review, or a combination. Whether the mechanism can ever operate to reduce rent, and whether the Act affects it.
Outgoings. What you are being asked to contribute to, whether estimates were provided, and whether any of it is not recoverable from you at all.
Term and options. The initial term, whether there are options to renew, how and when they must be exercised, and what happens if you miss the window. Missing an option date is one of the most common and least forgivable errors in commercial tenancy.
Permitted use. What you are allowed to do at the premises, and whether it is drawn widely enough to allow the business to change.
Assignment. What happens when you want to sell. Whether the landlord can refuse, on what grounds, and whether you remain liable after assigning.
Guarantees. Bank guarantee amount, when it can be called, and when it must be returned. Personal guarantees, and how far they extend beyond the lease term.
Make-good. What condition you must return the premises in. Whether you must remove the fit-out you are about to install. This is a cost that falls due at the worst possible moment — when you are already leaving — and it is routinely larger than tenants expect.
Relocation and demolition clauses. Whether the landlord can move you or end the lease to redevelop, and what you get if they do.
Review and negotiation are different things
We quote them separately, deliberately.
A review is us reading the lease and telling you in writing what it means and what we would change. Some clients take that and negotiate themselves, which is entirely reasonable and often effective — knowing which three clauses matter is most of the battle.
Negotiation is us dealing with the landlord's solicitor. It takes as long as it takes and depends heavily on how motivated the landlord is, so we scope and quote it once we have read the lease and know what we are asking for.
Frequently asked questions
How do I know if my lease is retail or commercial?
It turns mainly on how the premises are used — broadly, whether they are used wholly or predominantly for the retail provision of goods or services — rather than on what the lease is called. Occupancy cost also matters, because leases above a set annual threshold fall outside the Act. Getting this wrong in either direction is expensive, which is why it is the first thing we check.
Do I need a lawyer to review my retail lease?
Professional review is strongly recommended before signing a retail or commercial lease. A lease can create significant long-term financial and legal obligations, and unlike most commercial documents it is very hard to get out of once signed.
What should I look for in a retail lease?
Important provisions can include rent, rent reviews, outgoings, term, options, permitted use, assignment, guarantees, make-good, relocation, demolition, default and termination. Where the Act applies, some of these are constrained by statute regardless of what the lease says.
What is make-good?
Make-good provisions determine what a tenant must do to the premises at the end of the lease. Depending on the lease, this can include removing fit-out, repairing damage, reinstating alterations and returning the premises to a specified condition. It is one of the most commonly underestimated costs in a lease, because it falls due years after anyone thought about it.
What is the difference between a bank guarantee and a personal guarantee?
A bank guarantee provides security to the landlord for obligations under the lease, and the amount and the circumstances in which it can be called should be carefully reviewed. A personal guarantee can make an individual personally responsible for certain obligations of the tenant company — so the protection of trading through a company may not be there at all. The scope of any guarantee should be understood before it is signed.
Can I sell my business and transfer the lease?
Often a lease will contain an assignment process and may require landlord consent. The lease should be reviewed before agreeing to sell the business, because an assignment the landlord can refuse, or delay, can hold up the whole sale.