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Retail shop lease report
Legal Advice Report
Section 22D of the Retail Shop Leases Act 1994 (Qld) (the ‘Act‘) requires a ‘prospective lessee’ of a retail shop, or a ‘prospective assignee’ of a ‘retail shop lease’, to give to the lessor prior to entering into a retail shop lease a financial advice report and a legal advice report (unless, the prospective lessee/assignee is a major lessee).
A ‘major lessee‘ means the lessee of five (5) or more retail shops in Australia.
A ‘financial advice report‘ means a report:
- in the approved form;
- containing the particulars prescribed under a regulation; and
- completed and signed by an accountant who is a qualified accountant under the Corporations Act 2001 (Cth).
A ‘legal advice report‘ means a report:
- in the approved form;
- completed and signed by an Australian lawyer;
- stating that the lawyer has given the prospective lessee of a retail shop, or the prospective assignee of a retail shop lease, seeking the report, advice about the legal meaning and effect of:
- the terms and conditions of the proposed lease, or the lease the subject of the proposed assignment;
- the disclosure statement given to the person under part 5 of the Act (i.e. namely, the ‘Disclosure statement by the lessor‘);
- a waiver notice to be given by the person; and
- containing the other particulars prescribed under a regulation
The lawyer will be required to advise the prospective lessee about:
- how rent is to be calculated and reviewed under the retail shop lease;
- their liability to contribute to the lessor’s outgoings and how those outgoings are calculated;
- any other payments required under the retail shop lease and how they are calculated;
- the term of the retail shop lease;
- any special or unusual terms or conditions of the retail shop lease;
- whether the premises are a lot within a community title scheme;
- any repayable bond or guarantees required;
- whether or not the retail shop lease contains an option to renew and the rights of the lessee/assignee to extend the retail shop lease if there is no option to renew;
- obligations of the lessee/assignee, and the lessor, at end of retail shop lease;
- whether or not the retail shop lease contains a relocation clause or a demolition clause and, if it does, the way in which the clauses operate (including with regard to the implied relocation and demolition provisions in the Act);
- permitted use and exclusivity of permitted use;
- any insurance and indemnity clauses in the retail shop lease (and the liability or obligations of the lessee/assignee under those provisions);
- consequences of the lessee/assignee breaching retail shop lease terms or conditions;
- the entitlements of the lessee/assignee and the lessor when dealing with the retail shop lease or business assets as security (under section 45 of the Act and under the retail shop lease); and
- related matters, such as advice that the lessee/assignee may obtain additional professional assistance and advice with respect:
- town planning matters, including the licences or permits required to carry on the business intended in the retail shop;
- building laws, including the appropriate classification under the Building Act 1975 to carry on the business intended in the retail shop;
- statutory approvals required to carry on a retail business of the type intended;
- financial advice about the operation of the retail business intended to be carried on; and
- appropriate insurances to meet the obligations of the lessee/ assignee under the retail shop lease, and as otherwise appropriate for the lessee/ assignee’s business intended in the retail shop.
The lawyer will also be required to clearly inform the prospective lessee that any legal advice given excludes and does not extend to expressing any opinion or providing any advice about non-legal matters such as:
- the financial viability of the business intended to be carried on in the retail shop by the prospective lessee/assignee;
- the ability of the prospective lessee/assignee to meet the financial commitments under the retail shop lease; or
- any accounting requirements or taxation implications of entering into the retail shop lease.
If you are entering a new retail shop lease or taking over an existing retail shop lease, and you would like to obtain legal advice about the terms and conditions of the proposed retail shop lease, including having the mandatory legal advice report certificate prepared and signed by a duly qualified and licenced lawyer, please contact AdviiLaw today to obtain an obligation free quote. Contact us on 07 3088 7937 or email us at [email protected].
This commentary is of a general nature only, containing nothing more than some general information for the reader. It is not intended to be legal advice, nor cannot it be relied upon as legal advice. To this end, please read our Website Terms including the disclaimer contained therein carefully. Laws, rules and principles may be subject to sudden and unexpected changes and you should always consult a lawyer about your specific circumstances.