The Retail Leases Amendment (Review) Act 2017 No. 2 (NSW) (the Act) was assented to on 1 March 2017 and significantly amends the Retail Leases Act 1994 No.46 (NSW) (RL Act).

The Act was the result of statutory review and considerable discussion between the NSW Government and retail industry bodies following the release of a discussion paper, “2013 Review of the Retail Leases Act 1994” which identified a number of issues within New South Wales’ retail leasing regime.

 

● improve the standard of conduct of both the Lessor and the Lessee;

● implement protection mechanisms to reinforce certainty of negotiated lease terms; and

● clarify the existing processes for efficient operation of retail leasing in NSW.

 

• Lessor Disclosure Statement: The Act amends the prescribed disclosure form to simplify the procedure. Lessors must make full disclosure of the Lessee’s obligations in a Disclosure Statement, including the Lessee’s contribution to outgoings which cannot be recovered if such outgoings are not clearly disclosed.

• Lessee’s right to compensation: The Act allows for a Lessee to be compensated for reasonable costs incurred (such as fit-out costs) where a Lessee terminates due to failure by the Lessor to provide a Disclosure Statement within the first 6 months of a lease term or where the Disclosure Statement is false or incomplete.

• No minimum term: The requirement for a Lease to be a minimum term of 5 years (allowing for short term leases less than 5 years) has been removed.

• Registration of Lease: A Retail Lease must be registered if it is for a term of 3 years or more and a Lessor is obliged to lodge the Lease for registration within 3 months of return of the executed Lease by the Lessee. (The Act permits some delays such as delay due to obtaining the mortgagee’s consent or requirements arising under the Real Property Act 1900 that are beyond the control of the Lessor).

• Executed Lease issued to Lessee: A copy of the executed Lease must be provided to the Lessee within 3 months (instead of 1 month) of the executed Lease being returned to the Lessor.

• Bank Guarantee: A Lessor is required to return a Bank Guarantee to a Lessee within 2 months after the Lessee has performed all of its obligations under a Lease.

• Jurisdiction Limit: The monetary limit for claims arising under the Act within the jurisdiction of the Civil and Administrative Tribunal has been increased from $400,000 to $750,000.