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  • Writer's pictureEvan Sarinas

6 Essential Tips for Successful Lease Negotiations

In my 25 years of legal experience, I have negotiated a wide range of transactions, including numerous retail and shop lease agreements for both landlords and tenants.


Careful advice and thorough negotiations before signing leases are crucial to securing a fair and advantageous lease for your business interests.


In this article, we will explore our top six tips for tenants aiming to negotiate a successful retail lease.


Table of Contents


 

Leasing Legislation Framework


In Queensland, retail leases (premises serving customers directly or shopping centres with five or more retail shops) are governed by the Retail Shop Leases Act 1994 (Qld) (“the Act”).


Commercial leases, such as those for factories or warehouses, fall under the Property Law Act 1974 (Qld). This article focuses on retail leases.


Lease terms are negotiable, making it essential to obtain legal advice to understand the implications and ensure fairness before signing. Leases can be complex and lengthy, and mandatory disclosure statements may be confusing without legal guidance.


Investing in this due diligence protects your business interests and helps avoid future disputes and losses.


Top Tips for Successful Retail Lease Negotiations


Tip 1: Avoid Proposals

Avoid signing a "proposal" or "Heads of Agreement" that commits you to the lessor’s "usual terms" without knowing what they entail. Ensure important terms are stated upfront in the proposal to avoid disadvantages and misunderstandings. Clarity is key to protecting your interests.


Tip 2: Shopping Centre Constructions/Redevelopments

If your lease is subject to construction or redevelopment, ensure it includes a term allowing you to exit if the premises are not built by a certain date or differ significantly from the plans. Negotiate this term with the lessor to protect your interests.


Tip 3: Check the Permitted Use of Premises and Hours of Operation

Check the permitted use and hours of operation in the lease, as some restrict operation hours and impose additional rent for extended hours. These terms are often buried in the document.


An experienced leasing lawyer can identify these issues and ensure compliance with local regulations, licenses, and other requirements.


Tip 4: “Make Good” Obligations

Tenants must maintain the premises and often face "make good" provisions at the lease's end, such as repainting and new flooring. Clarify these obligations during negotiations to avoid costly surprises. Clear drafting can save you substantial amounts at the lease's conclusion.


Tip 5: Who Pays the Lease Fees and Costs?

Leases often require tenants to pay registration fees, mortgagee consent fees, and bank guarantee costs. These costs are negotiable, so have a lawyer address and negotiate favourable terms on your behalf.


Tip 6: Ensure the Lease is Carefully Worded

In disputes, courts interpret the lease's wording to determine the parties' intentions. For example, in the case judgment with Queensland case Southport Memorial Club Inc v Returned and Services League of Australia (Queensland) Southport Sub-Branch Inc [2023] QCA 146, a dispute hinged on the interpretation of a single word. Careful drafting can prevent such disputes.


Conclusion


Legal advice is critical before signing a lease, especially for business owners entering retail or commercial leases. Lease agreements can be complex, and penalties for breaches can significantly impact your business’s cash flow, profitability, and reputation.


At Sarinas Legal, our experienced team of business lawyers specialises in drafting, negotiating, and advising on retail and commercial leases. Let us help you secure a lease that supports your business success.


 

Evan Sarinas Principal of Sarinas Legal

Evan Sarinas - Principal of Sarinas Legal


With 25 years of legal experience, Evan Sarinas has built a distinguished career negotiating a wide range of transactions, including numerous retail and shop lease agreements for both landlords and tenants.


As the founder and Principal of Sarinas Legal, Evan is known for providing careful advice and conducting thorough negotiations to secure fair and advantageous leases for his clients.


Evan’s expertise spans various legal areas, but he is particularly adept at handling retail and commercial leases. He understands the complexities and nuances of lease agreements governed by the Retail Shop Leases Act 1994 (Qld) and the Property Law Act 1974 (Qld).


His deep knowledge of these regulations ensures that his clients are well-informed and protected throughout the leasing process.


Business owners frequently seek Evan’s guidance for his entrepreneurial mindset and commercial pragmatism. His ability to efficiently analyse complex legal documents, identify critical issues, and navigate intricate legal challenges has helped many businesses thrive.


Evan’s approach includes clear, transparent, and specific legal advice, ensuring his clients can make fully informed decisions.


At Sarinas Legal, Evan leads a team of experienced business lawyers specialising in drafting, negotiating, and advising on retail and commercial leases.


His commitment to meticulous preparation and integrity ensures that his clients' interests are always safeguarded, helping them avoid future disputes and losses.

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