Commercial and retail leases in NSW
For tenants and landlords. Know what the lease says, and what the law adds to it, before anyone signs.
A lease can bind you for years.
It sets the rent, the outgoings, the repairs and the way out.
For many shops, the Retail Leases Act 1994 (NSW) adds rules the lease cannot remove.
We check which law applies, then explain the lease line by line.
Retail lease or commercial lease
The Retail Leases Act 1994 (NSW) applies to most leases of retail shops in NSW.
In general, the Act covers a shop where:
- the lettable area is less than 1,000 square metres,
- the premises are used wholly or mainly for a business listed in Schedule 1 to the Act, or for any business inside a retail shopping centre, and
- the lease term, with any options, is at least six months and less than 25 years.
Some premises are excluded, such as a shop run by the tenant on behalf of the landlord.
A lease of offices, warehouses or factories outside these rules is a commercial lease.
A commercial lease is governed mainly by its own terms and the general law of contract and property.
That makes the wording of a commercial lease even more important.
Disclosure under the Retail Leases Act
- The landlord must make a copy of the proposed lease available, and give the tenant the NSW retail tenancy guide, as soon as negotiations begin.
- The landlord must give the tenant a lessor's disclosure statement at least 7 days before the lease is entered into.
- The statement sets out the rent, the outgoings the tenant must pay, and other key costs and terms.
- The tenant must give the landlord a lessee's disclosure statement within 7 days after receiving the lessor's statement, or a longer period if agreed.
- The NSW Small Business Commission publishes the approved disclosure statement form and the retail tenancy guide.
The tenant's rights
- If the lessor's disclosure statement was not given, was incomplete, or was materially false or misleading, the tenant may end the lease by written notice within the first 6 months after it was entered into.
- The tenant cannot end the lease on this ground where the landlord acted honestly and reasonably and the tenant is in substantially as good a position as if the failure had not occurred.
- A tenant who ends the lease on this ground may recover compensation for costs reasonably incurred, including fit-out costs.
- A tenant is generally not required to pay outgoings or contributions that were not disclosed in a disclosure statement.
- A party who suffers loss from a false or misleading statement made by the other party before the lease, knowing it was false or misleading, may claim reasonable compensation.
Leases over three years
Under the Retail Leases Act, a retail lease for a term of more than 3 years, including options, must be lodged for registration by the landlord.
The landlord must do this within 3 months after the tenant returns the signed lease.
The landlord must also give the tenant a signed copy of the lease within 3 months.
Registration is completed with NSW Land Registry Services.
Mediation comes first
Most retail lease claims must go to mediation with the NSW Small Business Commissioner before the NSW Civil and Administrative Tribunal will hear them.
A mediation certificate is attached to the Tribunal application, unless an exception applies, such as an urgent order in the nature of an injunction.
A retail lease claim in the Tribunal must generally be made within 3 years after the liability arose.
A Tribunal filing fee applies.
Where tenants and landlords get caught
- Assuming every shop lease is a retail lease.
Size, use, location and term decide whether the Act applies. Check before relying on it.
- Signing before the 7 days have passed.
The disclosure statement must be given at least 7 days before the lease is entered into. Missing this step can give the tenant a right to end the lease.
- Leaving outgoings out of the disclosure statement.
A tenant may not have to pay outgoings that were not disclosed. Landlords should make the statement complete.
- Forgetting to register.
A retail lease over 3 years must be lodged for registration within 3 months. The duty falls on the landlord.
- Skipping mediation.
Most retail lease claims cannot go to the Tribunal without a mediation certificate.
- Reading a commercial lease as if the Retail Leases Act protects you.
If the Act does not apply, the lease terms usually decide the outcome.
Common questions
Is my shop covered by the Retail Leases Act?
It depends on the floor area, the use, whether it is in a shopping centre, and the term. We can check this for you from the lease and the plan.
How long before signing must I receive the disclosure statement?
At least 7 days before the lease is entered into.
Who registers a retail lease?
For a lease over 3 years, including options, the landlord must lodge it for registration within 3 months after the tenant returns the signed lease.
Can I go straight to the Tribunal over a retail lease dispute?
Usually not. Most claims need mediation with the NSW Small Business Commissioner first.
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