How legal guidance avoids retail lease headaches

15th June 2022

Most retail lease disputes are resolved in an initial mediation stage, with the support of a mediator and the tenant/landlord’s legal representatives.

Learn how legal guidance – both before signing a retail lease and if you run into issues – can help you save money and reach a resolution faster.

A recap on commercial vs retail leases

We have a deep-dive on the differences between commercial and retail leases, but essentially it comes down to the use of the premises. If a premises is used to interact with customers/the public as its main source of income, this is a good indication that it requires a retail lease.

Offices such as medical centres or dentists can be a bit trickier to define, but if they’re located in a shopping centre or strip, they’re likely to have a retail lease.

Commercial leases relate more to warehouses, offices or industrial sites, where the public aren’t physically entering that business each day to purchase goods/services.

How retail lease disputes are resolved

This is a process that often only takes 3-4 hours, with the necessary guidance of a legal professional (a mediator) to help find a resolution. If these fail, legal guidance can help tenants and landlords navigate escalations of disputes in reference to the relevant retail tenancies Actof that state or territory.

  1. While neither party is compelled to attend a mediation, an experienced mediator will outline the benefits of the process and attest to its ability to find resolutions quickly and efficiently.
  2. Your mediation is a private negotiation, where the tenant and the landlord of the rental lease come to an agreement. Neither the mediator nor any other legal representatives provide a judgement. If a resolution is found, then both parties will sign a binding agreement.
  3. If this process fails, disputes are referred on to the next relevant body. This differs across the country, with various bodies overseeing escalated disputes. Some bodies won’t allow your issue to be heard unless you have gone through the mediation process first.

Common issues retail landlords face

It’s rare to have a retail lease dispute that falls outside of the most common issues listed below.

  • Failure of tenants to pay rent or refusal to leave after lease ends
  • Using the premises in any other way than what is agreed in the lease, known as a breach of lease
  • When tenants sublet their lease
  • Damage to the premises
  • Failure to manage premises and/or report on maintenance issues
  • Undertaking unapproved works on the premises (this can often come from a lack of understanding of what a tenant is allowed to do, especially for retail leases).

Many of the above issues occur simply due to a lack of communication or understanding. Having legal support can help you address these issues quickly and without any unnecessary hassles.

Common issues retail tenants face

Remember that landlords of retail leases prioritise continuity and predictability in their leases. Both tenants and landlords are looking for long-term leases (5+ years) compared with residential tenancy agreements, so act carefully when faced with issues like those listed below. Most issues can be resolved long before they escalate and costs increase.

Some common issues retail tenants face that can lead to disputes:

  • Disruptions from landlords, meaning the tenant can’t conduct their business
  • Landlords withholding bond
  • Rent disputes (i.e., during the review process)
  • A lack of repairs following reporting from the tenant
  • Being locked out of the premises or having a lease ended without the adequate warning stipulated in the lease agreement.

How legal support can get you through retail lease headaches

As with any issue between two parties, there are always personalities, emotions and opinions behind disputes. Legal guidance can help you keep these front-of-mind to help avoid issues escalating, with the emotion taken out of communications from the start.

If you’re a landlord or tenant of a retail lease, avoid making any initial decisions that could escalate an issue (such as issuing an eviction notice or demanding costs for damage) before talking to your lawyer. They can guide you through your options but also help you manage a situation effectively, so that all parties come away content with the result.

Seek professional advice when trying to resolve an issue with your retail lease

At Lakis & Knight, we give small to medium-sized businesses the information to make the right decisions about leases. Our personalised approach and fixed-fee service give you complete transparency when resolving issues, so you can avoid dispute escalations. If you’d like to speak further about your options for your lease, contact us to book your free, no-obligation discovery session.