With options to renew a lease

Section 46 of the Retail Shop Leases Act (RSLA) requires a landlord to give written notice at least 2 months (but no longer than 6 months) before the option date (the date under the lease by which the tenant must exercise its option).

Until 2016, landlords were subject to a penalty if such notice was not given. Whilst this has now been removed from the RSLA, it is good practice for landlords to diarise and notify the tenant of the option date.

Have you diarised the notice period within which you must give your tenant notice of the option date?

Without options to renew a lease

If a retail shop lease does not contain an option to renew or extend, and if there is no agreement for its renewal or extension, the landlord must give the tenant written notice within the notice period*:

1)      offering it a renewal or extension; or

2)      notifying the tenant the landlord is not offering a renewal or extension.

If the landlord is offering a renewal or extension, the written notice must include the terms of the renewal or extension – including rent payable.

[*For a lease of less than one year the notice period is at least 3 months but not more than 6 months before the lease’s expiry date.
For leases for more than one year, the notice period is at least 6 months but not more than one year before the expiry date.]

If the tenant gives the landlord written notice before the lease expires, asking for an extension and the landlord fails to give written notice to the tenant, the term of the lease is automatically extended for 6 months after the landlord gives the notice,

During such 6 month extension, the tenant may terminate the tenancy at any time (by one months’ notice).

If a landlord gives written notice offering the tenant a renewal or extension, the landlord cannot revoke the offer:

1)      until one month after it is made; or

2)      if the tenant accepts the offer, within one month after the offer is made.

We have considerable expertise and many years experience in advising on leases (whether retail, commercial or industrial) on behalf of both landlords and tenants.

This article only provides very general advice and should not be relied on without proper legal advice on your specific circumstances.

If you would like more information about an existing, or new lease, or an assignment of lease, please call us on (07) 5443 4744 or email info@pacificlaw.com.au