Lease costs and fit-out costs

 

ACT

See section 23. Each party is to bear its own costs in relation to the preparation of the lease. If 1 party requires the lease to be registered, that party must pay any fee for registration. The costs of obtaining a mortgagee's consent to the lease are deemed to be the landlord's costs.

NSW

See sections 12, 13, 13A, 14 and 16.

Section 14. The landlord is responsible for lease preparation costs (excluding registration fees under the RPA).

Section 16. If the lease is for a term of 3 years or more or the parties have agreed to register the lease, the parties must lodge the lease for registration within 3 months after the lease is returned to the landlord. There is a penalty imposed of up to 50 penalty units if the landlord has not lodged the lease for registration, unless the delay has been caused in obtaining mortgagee consent.

Section 12. A provision of a retail shop lease that requires the tenant to pay or contribute towards the cost of any finishes, fixtures, fittings, equipment or services, in or for the shop is void unless the liability to make the payment or contribution is disclosed in a landlord's DS given to the tenant.

Section 13 applies if a tenant of a retail shop is liable to pay for work carried out by or on behalf of the landlord (before or after the lease is entered into) to enable the proposed fit-out of the shop by the tenant.

The maximum amount or formula payable with respect to costs is to be agreed between the parties before the lease is entered into. The tenant is not liable to pay more than the agreed amount.

Section 13A. If a landlord of a retail shop in an RSC requires a particular standard of construction for fit-outs to be carried out by the tenant, the relevant information about the standard is to be contained in a tenancy fit-out statement. The tenancy fit-out statement should be accompanied by the landlord's DS or in the lease or any agreement for the lease of the shop.

NT

See section 23. A tenant must only pay the landlord's costs if the tenant is provided with a copy of the account presented to the landlord for those costs and the amount of the costs or the method of calculation of those costs is included within the landlord's DS. A tenant is not liable to pay any more than a "reasonable sum" for legal and other costs incurred in connection with the preparation of a retail shop lease.

The landlord may recover a reasonable sum for legal and other expenses incurred in the preparation of the lease from a person who enters into and then withdraws from negotiations with the landlord in respect of the retail shop lease. Other expenses include:

  • negotiation, preparation and execution of the lease;
  • obtaining consents from a mortgagee or government agency; and
  • complying with survey or compliance requirements under an Act.

See section 22. A provision of a retail shop lease that requires the tenant to pay or contribute towards the cost of any finishes, fixtures, fittings, equipment or services is void unless the liability to make the payment or contribution is disclosed in a landlord's disclosure statement given to the tenant.

QLD

See section 48. The landlord cannot recover expenses for preparation/renewing/ extending a lease or mortgagee consent fees or the costs of complying with the Act but a tenant can be required to pay for:

  • registration fees; and
  • costs of survey.

A landlord may recover reasonable legal or other expenses incurred for preparation of a final lease if:

  • the terms of the lease are agreed;
  • the tenant gives notice to the landlord to prepare the final lease;
  • the lease is prepared; and
  • the tenant does not sign it.

See section 48(3).

SA

See section 13. The tenant may only be required to fit out or refit or provide fixtures, plant or equipment if the DS discloses the obligation and contains sufficient details for the tenant to obtain an estimate of likely costs.

See section 14. The tenant is not required to pay such costs until provided with copies of any account rendered to the landlord. If the tenant is liable for the landlord's costs, the liability cannot exceed the stamp duty and registration fees and half of other "preparatory costs".

Preparatory costs include:

  • fees charged by a mortgagee for consenting to the lease; and
  • costs of attendances on the tenant by the landlord or landlord's lawyer.

Note: This section does not limit the recovery of preparatory costs incurred by the landlord from a person who enters into and then withdraws from lease negotiations.

TAS

See section 8. Each party is to bear its own costs in the preparation of the lease. The landlord may charge the tenant the cost of any alterations the tenant requires to the lease. If the prospective tenant gives written authorisation for the preparation of the lease, the tenant may agree in writing that if the tenant withdraws from lease negotiations then the tenant will be responsible for the costs of preparation of the lease. The parties are to negotiate payment of disbursements such as stamp duty and the costs of procuring mortgagee's consent.

VIC

See section 51. The landlord cannot recover expenses relating to:

  • negotiation, preparation or execution of the lease;
  • obtaining the consent of a mortgagee to the lease; or
  • the landlord's compliance with the Act.

This section does not prevent a landlord from claiming the reasonable legal or other expenses incurred by the landlord in connection with an assignment of the lease or a sub-lease, including investigating a proposed assignee or sub-tenant and obtaining any necessary consents to the assignment or sub-lease.

WA

See sections 9(2)(b)-(c) and 14B.

A landlord cannot claim from the tenant the landlord's legal or other expenses in relation to:

  • negotiation, preparation or execution of the lease as well as an extension or renewal of lease;
  • obtaining the consent of a mortgagee to the lease; or
  • the landlord's compliance with the Act (for example, WA SAT application fees),

but the above does not prevent a landlord from claiming fair and reasonable legal or other expenses incurred by the landlord in connection with:

  • the negotiation, preparation and execution of an assignment of the lease or sublease; and
  • obtaining any necessary consents to the assignment or sublease.

See section 12(3A). Any provision in a retail shop lease is rendered void if it has the effect of requiring a tenant to contribute towards the landlord's finishes, fixtures, fittings, equipment or services unless the DS given under section 6 "contains a statement notifying the tenant of the effect of the provision" See section 14C. Any provision in a retail shop lease is void if it requires a tenant to refurbish or refit the shop unless the provision gives "such details of the required refurbishment or refitting as may be necessary to indicate generally the nature, extent and timing of the required refurbishment or refitting".

Note sections 12 and 14C are new provisions introduced in the 2013 Amending Act and are not retrospective. They only apply to New Leases (as defined below in "Minimum 5 year term of lease" concerning section 13).

Definitions and currency

 
Currency of information by jurisdiction Definitions

ACT information current as at 1 January 2022

NSW information current as at 1 January 2022

NT information current as at 1 January 2022

QLD information current as at 1 January 2022

SA information current as at 1 January 2022

Tas information current as at 1 January 2022

Vic information current as at 1 January 2022

WA information current as at 1 January 2022


"CMR" means current market rent.

"CMV" means current market value.

"DS" means disclosure statement.

"NCAT" means the NSW Civil and Administrative Tribunal.

"QCAT" means Queensland Civil and Administrative Tribunal.

"RSC" means retail shopping centre.

"RTC" means retail tenancy claim.

"RTD" means retail tenancy dispute.

"SAT" means State Administrative Tribunal.

"SBC" means Small Business Commissioner.

"SRV" means specialist retail valuer.

"VCAT" means Victorian Civil and Administrative Tribunal.

"WA SAT" means the State Administrative Tribunal of Western Australia.


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