The Retail Leases Act 1994 (NSW) (RLA) applies to all sale of retail goods / services to consumers that are:

• businesses listed in Schedule 1 Retail Leases Regulation 2022¹, which includes:
  • • Gymnasiums and fitness centres, including yoga, barre, pilates and dance studios; and
    • Small bars with a maximum patron capacity of 120;

          or

• any business located within a retail shopping centre (5 or more shops); and
• be less than 1000 square metres; and
• for a lease term between 6 months and 25 years.

The RLA includes provisions setting out the rights, liabilities and obligations of both Lessors and Lessees with respect to:

• Disturbance clause – Section 34 – If disturbance caused by the Lessor, which affects the Lessee’s use of the premises, and the Lessor does not rectify as soon as reasonably practicable, the Lessee is entitled to compensation / rental reduction.
  • • This clause applies to every Retail Lease regardless of being included as a term of the Lease.
• Relocation clause – section 34A, entitles the Lessor to relocate the Lessee to an alternate premises, to allow the Lessor to carry out refurbishment, redevelopment or extension requiring vacant possession with a 3 month relocation notice period. The Lessee is entitled to compensation for relocation or has the right to terminate Lease within 1 month of receipt of the relocation notice. If the Lessee does not provide notice to terminate within 1 month, the Lessee is taken to have accepted the relocation terms.
  • • This clause must be specifically included in any Lease to be enforceable.
• Demolition clause – section 35, entitles the Lessor to terminate the Lease to ‘demolish, renovate or reconstruct’ premises with a 6 month notice period. The Lessee is entitled to compensation for any costs it has incurred in fitting out the premises.   If the Lease term if for a period of 12 months or less, the notice period is reduced to 3 months.
  • • This clause must be specifically included in any Lease to be enforceable.

• Damaged Premises – Section 36 – Damaged Premises caused by any party / event. The Lessee can claim rental / outgoing reduction costs, or the Lessee can terminate the Lease on 7 days notice, if Lessor does not repair within reasonable time after receipt of notice from the Lessee to repair the damage premises.  Damage can be caused by any event, including flood / fire, which can be covered by insurance obtained by the Lessor and / or Lessee.
  • • This clause applies to every Retail Lease regardless of being included as a term of the Lease.

¹ Schedule 1 Retail Leases Regulation 2022

Section 7 of the RLA, ensures that any Retail lease term that is inconsistent with a provision of the RLA is void. 

Parties should also be aware of their rights and obligations with respect to:

• Unfair Contract terms;
• Unconscionable conduct;
• Misleading and deceptive conduct;

also applying to retail and commercial leases, regardless of any minor amendments / negotiations made to standard form contracts, including leases.

The above rights and obligations are relevant through all stages of a Lease term, including:

• commencement and negotiation of the Lease terms;
• renewal of the Lease, and
• the end of a Lease term, including make good rights (returning the premises to its original condition or otherwise as agreed between the parties,) and recovery of the security monies paid by the Lessee.

More Information

Please contact our Commercial Leasing Team at Matthews Folbigg Lawyers on 9635 7966 if you would like advice or assistance in respect of your rights and obligations relating to your lease.