I have put a lot of money into my new business - can I insist on a longer term on my lease?
In Victoria, the term of a retail premises lease (including any further term) must be a minimum of five years. Whilst this minimum requirement may be waived, you should consider your position carefully to ensure that the capital expenditure you make is a longer term investment.
In New South Wales, there is not a minimum term.
Case in point : You have found the perfect premises. You sign the Lease direct with the managing agent or landlord, including a waiver certificate, and you start making arrangements to open your business including: purchasing and installing new fitout, fixtures and fittings; spend weekends painting; arranging new window furnishings; installing new signage; arranging the premises opening party; arranging stationery including the new address of the premises; establishing your business social media presence etc. All at a high initial establishment investment cost.
At the end of your first successful year in your business, you contact the agent to arrange to continue the Lease beyond your first year only to be told that the Lease has actually ended and the landlord does not wish to negotiate a new lease. You are provided with a notice ending the Lease.
You had calculated that the establishment costs you spent at the start of the lease to have been spread over a longer term of the lease, but you are now facing not only spending that amount again, but going through the upheaval and inconvenience to establish new premises.
How could you have been protected? Whilst you may have considered that you conscientiously reviewed the lease documents prior to signing, you did not anticipate nor understand the five year minimum waiver document that you signed, nor the ramifications which flowed.
We recommend that all lease documents be reviewed by an experienced commercial solicitor, including any Heads of Agreement, Letter of Offer, Lease or other documents provided prior to signing anything.
