In Queensland, the Retail Shop Leases Act 1994 (RSL Act) sets out the laws that apply to retail shop leases. The RSL Act provides a number of protections for tenants and also requires the parties to undertake a disclosure process prior to entering into a retail shop lease. It is critical that as a retail landlord or tenant you are aware of your rights and obligations under the RSL Act before entering into a retail shop lease.

1. "Dealing" with the Lease

This includes assigning a lease or subletting premises. For a commercial lease, assignment or subletting is usually permitted subject to the landlord providing prior consent, and satisfaction of certain conditions. It is commonplace that an original tenant will not be released from liability post-assignment. 

Under a retail shop lease, an assignor must provide a prospective assignee with a disclosure statement and a copy of the current lease at least 7 days before the earlier of the following:

If the assignment is related to an agreement for sale - on the day the assignee enters into the agreement, or

• the day the landlord is asked to provide their consent.[1]    

A tenant must provide a financial advice report and legal advice report to the landlord prior to entering into a lease.[2]

Unlike under a commercial lease, the RSL Act provides for an assignor and any guarantor to be released from any liability under the lease resulting from a default by the assignee [3] if:

• the assignor has complied with section 22B or any order imposed on the assignor in section 22E(2)[4]; and
• the disclosure statement provided by the assignor under 22B is not a defective statement (as defined in the Act).[5]

2. Renewal of lease on expiration

Under both commercial leases and retail shop leases, if a lease contains an option to renew, a tenant will have the right to require the landlord to renew the lease for the specified option term after the expiry of the current term of the lease. That right is usually subject to conditions, such as the tenant having not breached the lease. 

The tenant is also required to give notice to the landlord exercising the option to renew within a certain window – usually between 3 months and 6 months before the end of the current term of the lease. Giving a valid notice within the window is critical – failure to do so means the option will be lost.

With a commercial lease the landlord is not required to remind the tenant of the existence of the option or the window during which the option can be exercised. It is therefore critical that a tenant under a commercial lease diarise the window. 

With a retail shop lease, the landlord must give notice to the tenant reminding them of the last date the tenant can exercise the option. The notice must be given at least 2 months, and not more than 6 months, before the last date the tenant can exercise the option.[6]

If a retail shop lease does not contain an option to renew, the lessor must give written notice to the tenant either offering to extend the lease or advising that the lease will not be extended.[7] If such notice is not given when required the term of the lease is extended until 6 months after the lessor gives the notice.[8]

We can provide advice on a wide range of property and leasing matters. If you require our assistance, please do not hesitate to contact us via email or call 07 3220 1144.

[1] s 22B(1).

[2] s 22D(2).

[3] s 50A(2).

[4] s 50A(1)(a).

[5] s 50A(1)(b).

[6] s 46(2).

[7] s 46AA(2).

[8] s 46AA(4).