Protection for Retail Shop Tenants.

The Retail Shop Lease Act provides for a number of instances where a landlord will be required to pay compensation to a Tenant such as where the landlord:

1.         Relocates the Tenant’s business to an alternative premises;

2.         Significantly disrupts trading to the Tenant’s business;

3.         Neglects the landlords responsibilities to clean maintain and repair the building;

4.         Causes the Tenant to enter the Lease as a result of false or misleading statements or representations;

5.         Fails to issue disclosure or issues disclosure that is defective.

Failure to properly disclose will permit the tenant to terminate the Lease at any time within 6 months from the date the tenant enters into the Lease.  Compensation may also be payable to the tenant.  This can be considerable as it could include all fit out costs. A Disclosure Statement is defective if it is incomplete or contains material that is false or misleading in a material particular.  A landlord must therefore carefully complete all parts of the Disclosure Statement.  If you are a Retail Shop Tenant then you can read more about some other protection that is afford to you or contact us.

Unconscionable Conduct

The Retail Shop Leases Act and the Trade Practices Act both contain provisions in relation to Unconscionable Conduct.  The Retail Shop Lease Act prohibits both the Tenant and the Landlord behaving in a way that is unconscionable in respect of a Retail Shop Lease.

Unconscionable Conduct is where one party in a business transaction misuses their greater bargaining or market power to achieve a result that is largely disadvantageous to the other party.  Some people confuse unfair conduct with  unconscionable conduct. Both parties to a lease may be entitled to act unfairly. For instance a landlord may be entitled to refuse to grant a further term or may refuse to accept the late exercise of an option to renew. This may be unfair but not necessarily unconscionable.

Registration of a Lease

A Lease which is for a period of more than three (3) years is required by law to be registered on the Title with the Department of Environment of Resource Management.  Registration of a Lease on Title provides a Tenant with protection as it gives notice to the world that the Lease exists and discloses the terms of that lease.  Generally the cost of registering a Lease is the responsibility of the Tenant.

Legal Fees

The Retail Shop Lease Act provides that a Landlord may not pass their legal fees in relation to the preparation and negotiation of a Lease onto a Tenant.  In Leases other than a Retail Shop Lease, the general practice is that the Tenant is responsible for the Landlord’s legal costs incurred in relation to the preparation and negotiation of the Lease.