Retail Leases Act – Reminder expiry clauses

This is a timely reminder for both landlords and tenants of retail leases that pursuant to the legislation (Retail Leases Act 2003 Vic),

a landlord is required to notify the tenant in writing at least six months (but no more than twelve months) before the lease term ends that:

1. either the landlord does not propose to offer a tenant a renewal of the lease; or
2. that the landlord will offer a renewal of the lease on terms specified in the notice.

If the landlord fails to provide such a notice the lease will be extended for a period of six months from the date after the relevant notice is given.

Similarly, if a retail lease contains an option that can be exercised by a tenant to renew the lease for a further term, the landlord must notify the tenant in writing at least six months (and no more than twelve months) before the date after which the option is no longer exercisable. If the landlord fails to give the tenant the necessary notice, the retail premises lease is taken to provide that the date by which the option must be exercised is six months after the landlord notifies the tenant as required pursuant to the Act.

In both of the above situations, a failure by the landlord to provide the required notice could have the effect of extending the term of the lease for the tenant’s benefit.

This article originally appeared in the Spring 2016 edition of InDispute. Other articles in this newsletter include:

• To agree or not to agree
• Employees leaving – IT forensic accountant and confidentiality​
• Getting the terms of trade right – lessons for traders
• Battle of the ‘big yellow box’: Chemist Warehouse loses appeal