Leases are contractual agreements between parties that reflect the arrangements between the lessor and the lessee.
There is a whole set of legislation that sets out the pre requests-of certain lease types. For example the conveyancing act, the real property act and the retail leases act.
Commercial Leases
These leases usually apply to premises used for warehousing, office, and industrial space.
Retail Leases
These leases usually apply to ground floor properties located on the street in suburban neighbourhood shopping centres and properties located in arcades, malls and shopping centres. The use must be that type nominated in the schedule of the retail lease act.
So the practical difference is that retail tenants are awarded protection under the act and this legislation clearly defines the obligations awarded to both parties and details the minimum requirements for leases and disclosure statements. Conditions pertaining to notices to terminate, demolition and relocation clauses are also clearly defined.
Retail lease preparation and mortgagee consent costs incurred by the lessor cannot be charged to the tenant. Commercial lease preparation costs are usually passed on to the lessee.
If a tenant’s use is listed in schedule 1 of the retail leases act, then the retail leases act applies irrespective of what lease type has been used so some of those conditions in the lease may not be enforceable, this could include increases, outgoings penalty interest and periodical termination notices. The commercial division of the NSW civil & administrative tribunal is the body that handles disputes and has the power to make orders that bind both parties.
