Retail Lease Agreement (All Jurisdictions)

This precedent is suitable for the lease of premises that are not located in a retail shopping centre but which are governed by the relevant retail leases legislation. The premises may be in a multi-tenanted building.

New South Wales

In New South Wales, the Retail Leases Act 1994 (NSW) (Act) applies to the lease of a “retail shop” that comprises premises:

• used wholly or predominantly for the carrying on of one or more of the businesses listed in Schedule 1 of the Act; or
• used for the carrying on of any business in a “retail shopping centre” as defined in section 3 of the Act (although this precedent does not apply to a lease of premises located in a retail shopping centre).

The Act does not apply to (see sections 5, 6, 6A and 6B of the Act):

• a shop that has a lettable area of 1000 square metres or more;
• a shop that is used wholly or predominantly for the carrying on of a business by the tenant on behalf of the landlord;
• a shop within a premises where the principal business is the operation of a cinema, bowling alley or skating rink and the shop is operated by the person who operates the cinema, bowling alley or skating rink;
• premises used only for any one or more of the purposes listed in Schedule 1A of the Act;
• a retail shop that is a stall in a market (unless the market is a permanent retail market);
• a lease of a retail shop for a term of less than 6 months (without any right for the tenant to extend the lease) unless the tenant has had uninterrupted possession for more than 1 year; or
• a lease for a term of 25 years or more (including any option terms).

In New South Wales, a lease with a term of more than 3 years (or where the original term plus the option term is more than 3 years) must be registered to ensure that the landlord cannot sell the premises to a third party free of the tenant’s interest under the lease (section 42(1)(d) of the Real Property Act 1900 (NSW)). The approved form of lease must also be used (section 53(1) of the Real Property Act 1900 (NSW)).

A lease in New South Wales must be lodged for registration in electronic form using an Electronic Lodgment Network Operators (ELNO) (eg PEXA), unless the lease is a type of lease that is considered to be a dealing with exception. For a list of the types of leases that are considered to be dealings with exception, see the Lodgment Rules Exceptions List published by the Office of the Registrar-General (NSW) and NSW Land Registry Services’ (LRS) Lodgment Rules Exception page.

For guidance on how to complete and lodge a lease for registration in electronic form, see the Registrar-General’s Guidelines.

If a lease is a type of lease that is considered to be a dealing with exception, then the lease must be completed in paper form (using paper dealing form 07L); however, it must still be lodged for registration electronically through an ELNO as a dealing with exception (with the completed paper dealing form 07L and any supporting documents attached in PDF format) and be accompanied by a completed Lodgment Rules Exception Form. For guidance on how to complete and lodge a dealing with exception, see the Registrar-General’s Guidelines.

If this precedent is being used for a lease that is being lodged for registration in paper form, then this precedent comprises Annexure A to the standard paper dealing form 07L. Paper dealing form 07L should comprise the first 2 pages of the lease and should be page numbered accordingly. See the Registrar General’s Guidelines for guidance on how to complete paper dealing form 07L and also on the requirements for paper dealings regarding execution, annexures and page numbering.

Victoria

In Victoria, the Retail Leases Act 2003 (Vic) (Vic Act) applies to a “lease” (which includes a lease, sub-lease, or an agreement for a lease or sub-lease, whether or not in writing) of “retail premises” which are defined under section 4(1) of the Vic Act as premises (not including any area intended for use as a residence) that, under the terms of the lease, are used (or are to be used) wholly or predominantly for:

• the sale or hire of goods by retail or the retail provision of services; or
• the carrying on of a specified business or a specified kind of business as determined by the Minister, of which there are currently none.

The Vic Act does not apply to (see section 4(2) and section 12 of the Vic Act):

• a retail premises lease for a term of less than 1 year (unless the term is less than 1 year due to the lease being renewed one or more times and/or continued, and the tenant is continuously in possession under the lease for 1 year or more);
• premises in respect of which the “occupancy costs” (as defined by section 4(3) of the Vic Act) under the lease exceed the prescribed threshold (currently $1,000,000 per annum exclusive of GST);
• premises used wholly or predominantly for the carrying on of a business by a tenant on behalf of the landlord as the landlord's employee or agent;
• premises leased to a listed corporation (within the meaning of section 9 of the Corporations Act 2001 (Cth)) or a subsidiary of one;
• premises leased to body corporate listed on a stock exchange outside Australia and its external territories, that is a member of the World Federation of Exchanges, or a subsidiary of such a body corporate; and
• other kinds of premises, businesses, tenants or leases that are exempted by determination of the Minister. A list of relevant ministerial determinations can be found on the Victorian Small Busines Commission website.

A tenant is entitled to a lease with a minimum term (including any option term) of 5 years (see section 21 of the Vic Act). Provision in a lease of a term of less than 5 years does not invalidate the lease, but rather, the term of the lease is extended so as to comply with section 21 of the Vic Act. For example, if a lease provides for a term of 2 years, together with an option of 2 years, the term of the lease is extended to 3 years (with the 2-year option). The requirement for a minimum term does not apply if the Small Business Commission, at the request of the tenant, provides a certificate pursuant to section 21(5) of the Vic Act of which a copy is provided to a prospective landlord.

Unlike in other states and territories, it is not usual to register leases in Victoria regardless of the duration of the lease.

Queensland

The Retail Shop Leases Act 1994 (Qld) (Qld Act) applies to all retail shop leases in Queensland entered into on or after 28 October 1994 (save for some exceptions set out in section 13 of the Qld Act) and irrespective of where the lease is entered into (see section 12 of the Qld Act).

Under the Qld Act, “lease” is defined as an agreement pursuant to which a person gives or agrees to give to another, for valuable consideration, a right to occupy premises (see the Dictionary to the Qld Act). The Qld Act applies whether or not the right to occupy is exclusive and therefore applies to an occupational licence. The application of the Qld Act is not limited to fixed term tenancies. It also applies to periodic tenancies and tenancies at will.

A “retail shop” under the Qld Act (see section 5B of the Qld Act) includes:

• premises situated in a retail shopping centre (this precedent does not apply to such premises), and
• premises used wholly or predominantly for the carrying on of a retail business.

Rather than providing a definition of retail business, the Qld Act enables regulations to prescribe businesses to which the Qld Act applies. A business is a retail business if it is a business listed in Schedule 1 of the Retail Shop Leases Regulations 2016 (Qld) (Qld Regulations) or if the whole or predominant activity of the business is, or is a combination of, the sale, hire or supply of goods or services mentioned in Schedule 1. The wholesale sale of goods is not a business (see Regulation 8 of the Qld Regulations).

The Qld Act (see section 5A(2)) does not apply to:

• a retail shop with a floor area exceeding 1000 m2;
• certain retail shops within the South Bank corporation area;
• premises used wholly or predominantly for the carrying on of a business by a tenant for a landlord as the landlord’s employee or agent;
• premises in a theme or amusement park;
• premises at a flea market, including an arts and crafts market;
• a temporary retail stall at an agricultural or trade show, carnival, festival or cultural event; or
• certain premises within a retail shopping centre.

If, at the time of commencement of a lease, the premises are not a retail shop but, after commencement, the premises become a retail shop, the Qld Act does not apply to the lease or an assignment of the lease or a renewal of the lease under an option under the lease (see section 14(1) of the Qld Act).

If, at the time of commencement of a lease, the premises are a retail shop but, after commencement, the premises cease to be a retail shop, the Qld Act continues to apply to the lease or an assignment of the lease or a renewal of the lease under an option under the lease (see section 14(2) of the Qld Act)

There is no requirement that retail leases be registered in Queensland and a “short lease” (being a lease with a total term (including options) of 3 years or less) is protected as an exception to indefeasibility (see section 185(1)(b) of the Land Title Act 1994 (Qld)). However, a lease for a total term of more than 3 years (including any option) should be registered in order to obtain indefeasibility of title.

The relevant form required to register a lease in Queensland is the Titles Registry’s Form 7 — Lease/sub lease which is downloadable from Titles Queensland’s website. The form has “pop up” instructions to assist with its completion. Any lease annexure must be on the appropriate Form 20 which is also downloadable from Titles Queensland’s website. The annexure form can be added to the lease by clicking on the “Add An Annexure” button in the bottom right hand corner of Form 7 — Lease/sub lease. Title Queensland’s website also has a titles fee calculator and a land title practice manual containing a lease section which provides general information about leases and further guidance on completing Form 7 — Lease/sub lease.

Western Australia

In Western Australia, the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (WA Act) applies to retail shop leases of premises in Western Australia, entered into after 13 May 1985.

The WA Act defines a “lease” (see section 3 of the WA Act) as:

• a lease, license, or agreement;
• whether in writing or not;
• that provides for the occupation of premises in Western Australia;
• whether for a term, or by way of a periodic tenancy, or tenancy at will.

The definition expressly includes an occupational licence and it is not necessary that a tenant have exclusive occupation of the premises for the WA Act to apply.

The WA Act’s definition of a “retail shop” provides for two categories:

1. The first category relates to any premises situated in a retail shopping centre that are used wholly or predominantly for the carrying on of a business. That category is not covered by this precedent.
2. The second category, to which this precedent relates, includes (see the definition of “retail shop” in section 3 of the WA Act) any premises not situated in a retail shopping centre that are used wholly or predominantly for the carrying on of a “retail business”.

A “retail business” in Western Australia is a business that wholly or predominantly involves the sale of goods by retail or that is a specified business. Regulation 3A of the Commercial Tenancy (Retail Shops) Agreements Regulations 1985 (WA) (WA Regulations) prescribes the following as a specified business:

• drycleaning;
• hairdressing;
• beauty therapy and treatments;
• shoe repair (which may include key cutting and engraving); and
• the sale or rental of video tapes, DVDs, electronic games or other similar amusements.

Excluded from the operation of the WA Act are (see the definition of “retail shop lease” in section 3 of the WA Act):

• retail shops with a lettable area exceeding 1000 m2 and that are not of a kind prescribed by regulations for the purposes of the definition of a “retail shop lease;
• leases held by certain listed companies and the subsidiaries of such companies; and
• leases of a kind prescribed by regulations as exempt from operation of the WA Act (see Regulation 3AB of the WA Regulations).

The WA Act provides (see section 13) for a minimum term of 5 years, including any option. If the term provided by the lease (“current term”) and any option totals less than 5 years, the lease is taken to have an option to renew the lease for a term commencing immediately after the expiry of the current term and ending 5 years after the commencement of the current term.

Examples:

• a lease for a term of 3 years with no option for a further term would contain a statutory 2-year option;
• a lease for a term of 3 years containing an option for a further term of 1 year would contain a further 1-year statutory option; and
• a lease for a term of 3 years containing an option for a further term of 3 years would not contain a statutory option under section 13 of the WA Act as it already gives the tenant the ability to occupy the premises for a total of 6 years.

There is no statutory requirement that a lease be registered in Western Australia. However, any lease for a term of more than 3 years should be registered in order to protect the indefeasibility of the tenant’s interests under the lease (it is not possible to register a lease for a term of 3 years or less).

A lease for a term exceeding 3 years must be in the approved form (section 91, Transfer of Land Act 1893 (WA)). See the Landgate website for a Lease form (Form L1). Completion instructions are on the last page of the form. All forms must be printed double-sided. For an additional page, see the Additional page to lease.

South Australia

The Retail and Commercial Leases Act 1995 (SA) (SA Act) applies to (see section 4 of the SA Act) a retail shop lease if the premises consist of a retail shop or a retail shop together with an adjacent dwelling.

“Retail shop” is defined (see the definition in section 3 of the SA Act) as business premises:

• at which goods are sold to the public by retail:
• at which services are provided to public, or to which the public is invited to negotiate for the supply of services; or
• which are classified by regulation as premises to which the SA Act applies.

Although premises may be classified by the Retail and Commercial Leases Regulations 2010 (SA) (SA Regulations) as premises to which the SA Act applies, no such regulations have been promulgated to date.

Under the SA Act, a “retail shop lease” or “lease” means (see the definitions in section 3 of the SA Act) an agreement under which a person grants, or agrees to grant, to another person, for value, a right to occupy a retail shop for the purpose of carrying on a business. The right to occupy does not require the tenant to be granted a right of exclusive occupation and the agreement may be express or implied. Further, the agreement may be oral or in writing, or partly oral and partly in writing.

Accordingly, the Act applies to an occupational licence.

The SA Act (see section 4(2)(a)) does not apply to leases in respect of which the amount of rent payable under the lease, during any period, exceeds the prescribed threshold. At the present time, the threshold is $400,000. If, at the time that a retail shop lease is entered into, the rent payable exceeds the prescribed threshold, the SA Act does not apply at that time. However, if, at any stage during the term, the amount of rent falls below the threshold, the lease will fall under the operation of the SA Act. Conversely, if the rent payable at the time of commencement of a retail lease is below the current threshold, it is governed by the SA Act unless and until the rent payable exceeds the threshold, at which time the SA Act will not, while that situation remains, apply to the lease.

Also excluded from the SA Act (see sections 4(2)(b)-(g)) are retail shop leases:

• for a term of 1 month or less;
• where the right of occupation arises under an agreement for the sale and purchase of premises, a mortgage, or a scheme under which a group of adjacent premises is owned by a company, and the premises comprising the group are let by the company to persons who jointly have a controlling interest in the company;
• where the tenant is a bank or building society, or an insurance company, or the Crown, or an agency or instrumentality of the Crown in right of the State, another State or Territory or the Commonwealth, a municipal or district council or other authority with powers and functions of local government;
• where, when the lease is entered into on or after 1 July 2020, the tenant is a public company or a subsidiary of a public company, other than a public charitable company or a subsidiary of a public charitable company;
• where the landlord is the Crown, or an agency or instrumentality of the Crown in right of the State or a municipal or district council or other authority with powers and function of local government and the tenant is of a class specified by the regulations for the purposes of this paragraph; and
• particular premises, or premises or leases prescribed by regulation 4 of the SA Regulations.

The above list is not exhaustive and other exclusions apply.

The exclusions noted at bullet points 3, 4 and 5 above are ambulatory, such that if the circumstances that lead to the lease being excluded cease to exist, the lease will fall within the ambit of the SA Act.

If, at the time of the commencement of a lease, the annual rental exceeds the current prescribed threshold, the lease, and any renewal thereof, will be excluded from the application of the SA Act throughout its full term, irrespective of any changes that may occur to the amount of the annual rent or the prescribed threshold, provided the lease, or any renewal thereof, is lodged for registration within 3 months of its execution. The exclusion only applies to leases entered into after 1 July 2020 and will not apply to the renewal of a lease pursuant to an option conferred by a lease entered into before that date.

The SA Act (see section 20B) provides for a minimum term for a retail shop lease of 5 years, inclusive of any option to renew contained in the lease. A retail shop lease which provides for a term of less than 5 years is not invalidated, instead, the SA Act operates to extend the term to the minimum period. For example, a lease for a term of 3 years which contains an option to renew for a further term of 3 years will comply with the requirement of a minimum term. However, if a lease for a term of 2 years contains an option for a further term of 2 years, the initial term of the lease will be extended to 3 years.

The Real Property Act 1886 (SA) provides statutory protection to a tenant in possession under an unregistered lease for a term not exceeding 1 year (see section 119 of the SA Act). To obtain indefeasibility of title, a tenant under a retail shop lease for a term exceeding 1 year should therefore ensure that the lease is registered.

Any land intended to be leased for a term of more than 1 year must also in the prescribed form: see section 116 of the SA Act — Form L1. This form, the annexure form (Form B1) (if required) and the applicable guidance (on completing the form) can be downloaded from the Land Services SA website.

Tasmania

In Tasmania, on 14 December 2022, the Retail Leases Act 2022 (Tas) (Act) received royal assent, and sections 1, 2 and 88 of the Act came into effect. The substantive provisions of the Act have not commenced. Under section 88 of the Act, and pending proclamation of the remaining sections of the Act, the provisions of the Fair Trading (Code of Practice for Retail Tenancies) Regulations 1998 (Tas) (Code) continue to apply to retail tenancies in Tasmania. The Code is contained in Schedule 1 of the Fair Trading (Code of Practice for Retail Tenancies) Regulations 1998 (Tas) (Code). The Code applies to all leases of retail premises in Tasmania entered into after 1 September 1998 and continues to apply to leases of retail premises until the substantive provisions of the Act have commenced.

So far as is relevant to this precedent, the Code (see Clause 1 of the Code) defines “lease” as any agreement providing for the occupation of retail premises, whether for a term, periodically or at will. Accordingly, the Code also applies to an agreement to lease and to an occupational licence.

The Code defines “retail premises” to include any business in a shopping centre (this precedent does not apply to a lease of such premises) and to premises that are used, wholly or predominantly, for one or more of the businesses listed in Appendix C of the Code.

The Code does not apply to retail premises with a lettable area not exceeding 1000 m2 (see Clause 2(3)(b) of the Code) or to premises:

• used wholly or predominantly for a business by a tenant on behalf of the property owner; or
• within which the principal business carried on is the operation of a business including, but not limited to, a cinema, a bowling alley, a skating rink, an indoor cricket centre, a basketball stadium, a netball centre or a business in the retail premises that is carried on by the person who operates the principal business.

The minimum term of a lease of retail premises in Tasmania is 5 years, unless a prospective tenant obtains a certificate from his/her legal advisor certifying that the legal advisor has explained to the prospective tenant the effect of a reduced lease period (see Clauses 10(3) and (4) of the Code).

In Tasmania, a lease for a term of over 3 years or less cannot be registered; however, the interest of a tenant in possession under a lease with a term of 3 years or less is statutorily protected (see section 40(3)(d)(ii), Land Titles Act 1980 (Tas)). Accordingly, a lease for a term of over 3 years should be registered in order to protect the indefeasibility of the tenant’s interest under the lease. See the Land Information System Tasmania (LIST) website for the Memorandum of Lease form and the accompanying dealing information. Completion instructions can be found on the website. A lodgment form also needs to be prepared in addition to the lease. The lodgment form and a guide to completing the lodgment form can also be found on the LIST website.

Northern Territory

Leases of retail shops in the Northern Territory are governed by the Business Tenancies (Fair Dealing) Act 2003 (NT) (NT Act). The NT Act applies to leases entered into after 1 July 2004.

“Retail shop lease” is defined by the NT Act (see section 5 for the definition) as an agreement under which a person grants, or agrees to grant, a right of occupation to another person, for valuable consideration, for use as a “retail shop” irrespective of whether:

occupation is exclusive; or

the agreement is express or implied, oral, in writing, or partly oral and partly in writing.

This definition is sufficiently comprehensive to apply to agreements for lease and to occupational licences.

Included in the definition of a “retail shop” are premises that are used wholly or predominantly for the sale or hire of goods by retail or the retail provision of services (see section 5 of the NT Act for the definition). The NT Act also includes as a “retail shop” a business conducted in a retail shopping centre, but this precedent does not apply to such a retail shop lease. The regulations may also prescribe a class or description of a business as a “retail shop”; however, to date, no such business has been so prescribed.

Premises expressly excluded from the operation of the NT Act include (see section 6):

• shops having a lettable area of 1000 m2 or more;
• shops used wholly or predominantly for the carrying on of a business by the tenant, on behalf of the landlord;
• shops within a cinema or a bowling alley operated by the operator of the cinema or bowling alley; and
• shops leased to a listed corporation or subsidiary of such a corporation.

The following classes of leases are also expressly excluded from the operation of the NT Act (see section 7).

• a lease for a term of less than 6 months, which does not confer a right of extension (by option or otherwise);
• a lease for a term, including any option period, of 25 years or more;
• a lease entered into before 1 July 2004; and
• a lease entered into under an option that was granted, or under an agreement that was made, before 1 July 2004.

The NT Act provides that a retail shop lease must have a minimum term (including any option term) of 5 years (see section 26). If a retail shop lease has a term of less than 5 years, the term will be extended so that the lease will not breach section 26 of the NT Act.

For example:

• a lease for a term of 3 years with no option for a further term will be extended to a term of 5 years;
• a lease for a term of 3 years containing an option for a further term of 1 year will be extended to a term of 4 years (with the 1-year option); and
• a lease for a term of 3 years containing an option for a further term of 3 years will not be extended under section 26 of the NT Act because it already gives the tenant the ability to occupy the premises for 6 years.

Section 189(1)(b) of the Land Title Act 2000 (NT) protects the interest of a tenant in occupation under an unregistered lease that is a “short lease” (being a lease for a term or 3 years or less, or a lease from year to year or a shorter period – see the definition in section 4 of the Land Title Act 2000 (NT)). Given that the NT Act prescribes a minimum term of 5 years for a retail shop lease, a retail shop lease should be registered to protect the indefeasibility of the tenant’s interest under the lease.

The relevant form required to register a lease in the Northern Territory is Form 31, which can be downloaded from the Northern Territory government website. Completion instructions, including witnessing requirements, can be found at the end of the form. Form 95 (Annexure sheet) should be used to annex the provisions of the lease to Form 31 and the third box under the heading “Covenants” on page 2 of Form 31 should be marked accordingly. The second box also needs to be marked if the conditions and covenants implied by sections 117 and 119 of the Law of Property Act 2000 (NT) do not apply to the lease.

Australia Capital Territory

The Leases (Commercial and Retail) Act 2001 (ACT) (ACT Act) applies to both “commercial premises” and “retail premises” in the Australian Capital Territory irrespective of where the lease was entered into or if the purported law of the lease is other than the law of the territory.

The Act (see section 12(5)) defines a “lease” as an agreement, whether or not in writing, that provides for the occupation of premises, exclusively or otherwise, whether for a fixed term, periodically or at will, and includes a sublease or a licence.

“Retail business” is defined as a business involving the sale or hire of goods or services by retail. The definition does not require the retail use to be the sole or even the predominant use. “Retail premises” are premises that are permitted to be used under a lease for retail business.

“Commercial business” is defined as any business not involving the retail sale or hire of goods or services. “Commercial premises” are premises that are permitted to be used under a lease for commercial business.

The Act applies to:

• retail premises other than large excluded premises (ie premises with a lettable area of larger than 1000 m2 that are leased to a listed public company, or a subsidiary thereof);
• small commercial premises (ie premises with a lettable area of 300 m2 or less);
• premises that are not used for residential purposes but which are leased to an incorporated association, or an entity entitled to be so incorporated, or to an unincorporated charity;
• premises that are used to provide a combination of business accommodation and secretarial services;
• premises which, under a lease, are used as a child-care centre, a sports centre, an art gallery or a gardening supply centre; or
• premises which, under a lease, are used as a service station.

As to leases which are excluded, see section 12 of the Act.

A tenant in the ACT, to whose lease the Act applies, is entitled to a lease with a minimum term (including any option term) of 5 years. If such a lease provides for a term of less than 5 years, then the term will be extended to the extent necessary to provide the minimum term (see section 104).

For example:

• a lease for a term of 3 years with no option for a further term will be extended to a term of 5 years;a lease for a term of 3 years with no option for a further term will be extended to a term of 5 years;
• a lease for a term of 3 years containing an option for a further term of 1 year will be extended to a term of 4 years (with the 1-year option); and
• a lease for a term of 3 years containing an option for a further term of 3 years would not be extended under section 104 of the Act because it already gives the tenant the ability to occupy the premises for 6 years.

The interest of a tenant under an unregistered lease for a term not exceeding 3 years is protected by section 58(1)(d) of the Land Titles Act 1925 (ACT). Given that the Act provides for a minimum term of 5 years, a retail lease should be registered to protect the indefeasibility of the tenant’s interest under the lease.

Given that the Act prescribes a minimum term of 5 years for a retail shop lease, a retail shop tenant should strongly consider registering its lease to protect the indefeasibility of its interest under the lease.

The relevant form required to register a lease in the ACT is Form 072 — SL — Sublease. See the Access Canberra website for the form and applicable fees.

User notes

• Before making a change to this precedent, the user should confirm that the change is permitted under the relevant retail leases legislation. For example, a ratchet clause (which prohibits the rent being decreased under a rent review) in a retail lease is not permitted in any jurisdiction under the relevant retail leases legislation. A ratchet clause has therefore not been included in this precedent.
• This precedent lease may need to be amended to accord with the relevant jurisdiction’s requirements.