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Don’t get caught out

For landlords, it might seem like a very simple distinction between what is a retail lease and what is a commercial lease.

Most know that if the permitted use under the lease is one of those uses that are ‘prescribed’ under Schedule 1 of the Retail Leases Act 1994 (NSW)(Act) as a retail use, then that lease is deemed to be a retail lease and accordingly the Act applies.

But what if the permitted use under the lease is, say, that of a commercial office and the premises is situated in a retail shopping centre? A commercial office use is not a prescribed retail use for the purposes of the Act. However, because the premises is located in a retail shopping centre, the Act will apply. This will mean that, amongst other things, the landlord will need to prepare and issue a disclosure statement to the tenant in accordance with the Act. A failure to do so may entitle the tenant to terminate the lease.

A ‘retail shopping centre’ is defined in the Act to mean a cluster of premises (not being stalls in a market) that has all of the following attributes:

  • At least 5 of the premises are used wholly or predominantly for the carrying on of one or more listed (retail) businesses;  
  • The premises are all owned by the same person, or have the same lessor or same head lessor, or comprise lots within a single strata plan;
  • The premises are located in one building or in 2 or more buildings that are either adjoining or separated only by common areas or other areas owned by the owner of the retail shops; and
  • The cluster of premises is promoted or generally regarded as constituting a shopping centre, shopping mall, shopping court or shopping arcade.

The key take-away is that even if your tenant does not carry on a retail business, that is irrelevant, if the premises is situated in a retail shopping centre. Landlords need to be mindful of this.

Contact the team at Conditsis Lawyers to demystify all your leasing needs on (02) 4324 5688 or by email at enquiry@www.conditsis.com

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