This week we have launched a new retail leases fact sheet to try to demystify the rights and responsibilities that both landlords and tenants have when entering a retail lease.

Over 50% of the small business disputes that come to the VSBC relate to issues between a landlord and the tenant. Quite often it is because the tenant does not understand what they are signing and has not read the fine print. Under law it is the landlord’s responsibility to provide this information before the tenant signs the lease, however we are finding this is not happening. I am not sure whether this is because the landlord and real estate agents don’t understand their obligations or choose not to.

There is a fine of up to $8000 for landlords or their commercial agent for failure to provide this information and I will be monitoring compliance with the Act to ensure tenants are being provided with the retail leases fact sheet and copy of the proposed lease.

To illustrate, we had a case recently where the landlord lodged an application for mediation seeking unpaid rent. When we contacted the tenant he complained they had not been provided with a disclosure statement or information brochure when entering into the lease. The premises were used as a mechanic shop. The landlord had advised the tenant it was not a retail lease, when clearly a mechanic shop is a retail lease. The tenant did not understand all the cost associated with the lease and a dispute could have been averted if he had been given all the information upfront.

I am hoping that by developing a plain English fact sheet for retail leases and a checklist for tenants to complete before signing a lease, small business retailers will be better informed and gain the confidence to engage in lease negotiations. A lease is an enforceable and legally binding document, and this makes it important for small business to understand. Hopefully if small businesses are aware of the terms before they sign their lease it will mean they don’t have to come to the VSBC later because of a dispute with the landlord.

You can download the Retail Lease Fact Sheet below:

https://www.vsbc.vic.gov.au/retailleasesbrochure

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