1. Pre-lease agreements


  • Is there a pre-lease agreement / memorandum of understanding / heads of agreement entered into by the parties or by a real estate agent on behalf of the Lessor?


  • If yes, note what needs be reflected in the lease.


  • Has the Lessee paid any money to the Lessor or real estate agent?


  • If yes, it the deposit refundable or can costs be deducted?


  1. Is the lease subject to the Retail Leases Act?


  • Minimum term 5 years unless s16 Certificate provided


  • Is the shop listed on schedule 1?


  • Is the shop in a shopping centre?



  • Retail Leases Act Applies


  • Retail Tenant’s Guide sent to lessee
  • Lessor’s disclosure statement
  • Lessor cannot have costs of preparing lease paid by Lessee


  1. Does the lease need to be registered?


  • < 3 years (including option)? No


  • > 3 years (including option)? Yes


  1. Is the Lessee in occupation?


  1. Obtain certified copies of Lessee’s ID. Also:


  • Particulars of experience : CV highlighting relevant experience


  • Particulars of assets & liabilities: schedule of assets & liabilities, tax returns


  • Particulars of financial resources: real estate owned, money to invest?



  1. Advise on lease, suggest amendments / deletions:


  • Parties: title search to determine lessor on the lease is the owner


  • bankruptcy search if natural person


  • ASIC search if company



  • Real Property Act requirements for signing


  • Registrar General’s guidelines – see ‘guide to dealing lodgement’


  • Is company seal required? See company constitution.


  • Premises


  • Confirm street address = folio identifier. Street address search.


  • Owned by the Lessor?


  • Mortgaged? Y – mortgagee will be required to consent – extra cost for Lessee


  • Term of the lease


  • When does the term begin?


  • Has the term already begun


  • Does it begin some time in the future? – recommend registration


  • Is the Lessee in occupation?


  • When can the Lessee occupy? Date


  • Check certificate of currency before occupation


  • Option


  • Is there an option?


  • When can it be exercised?


  • Earliest date for exercise? (usually 6 months from end of lease term)


  • Latest date for exercise? (usually 3 months from end of lease term)


  • Under Retail Leases Act Lessee may request determination of market rent prior to exercising the option. Section 32 Retail Leases Act


  • Requesting early determination extends time to exercise option


  • Is there more than one option? Advise / confirm instructions


  • Rent


  • Rent inclusive of GST?


  • Advise rent + GST figure in case client overlooked it


  • Client registered for GST?


  • Rent Reviews


  • Rent reviews usually occur annually on the anniversary of the commencement lease.


  • Annual rent increases occur on each rent review date.


  • A market rent review normally occurs at the end of the term / when the option is exercised.


  • GST


  • The Lessee is to pay all GST in respect of this lease. Amounts expressed in the lease are exclusive of GST. The Lessee is required to pay a further 10% GST.


  • Outgoings


  • The Lessee is usually liable to pay outgoings in addition to the rent.


  • What percentage or amount?


  • Request previous quarter figures from landlord


  • Abatement of rent


  • Should the building be destroyed, the rent will cease until the building is restored. No lessor should sign a lease without one of these. If its not there ask for it to be included.


  • Assignment and sub-letting


  • Does the lease allow it?


  • No assignment clause? Unlimited right to assign.


  • Repairs


  • The Lessee is responsible for repairs caused by use of the premises or damage caused by the Lessee, with the exception of fair wear and tear.


  • Repainting clause – how often?


  • Insurances


  • Usually Lessor requires public risk insurance to the extent of $20million.


  • Advise client to get other types of insurance also:


  • Fire & theft – usually available as a ‘package’. Reminder


  • Workers comp. If the client is new to business


  • Default and essential terms


  • Which are the essential terms? Advise client.


  • Bank guarantee


  • Usually equivalent of 3 months rent plus outgoings plus GST


  • Bank guarantee?


  • Security Deposit?


  • Retail Leases Act? – bond must go to Retail Tenancies Unit within 21 days


  • Guarantee


  • Guarantor required? Consider conflict of interest- independent advice


  • Duty


  • (Stamp) duty is not payable on commercial leases in NSW. Transfers only


  • Use of premises and Council’s consent


  • The Lessor gives no assurance that the premises may be used for the permitted use named in the lease.


  • Any current DA’s?



  • Obtain copy of DA file from Local Council if necessary.




  • Car parking


  • Car parking included?


  • Does client expect / require car parking?


  • Does client need carpark for other reasons? E.g. trucks, loading



  • Searches – confirm description of property. Does street address correspond with folio identifier? – street address search.


  • Title search


  • To confirm Lessor is the owner


  • Section 149 – zoning. Is the use allowed?


  • . Company search if lessor is a company to determine


  • Who the directors are


  • Any charges that may require consent


  • Is the Lessor registered for GST?



  1. Points to negotiate: Get instructions from client regarding amendments to request.


  • Consider in particular:


  • After hours access – is there an additional charge?


  • After hours air-conditioning – is there an additional charge?


  • Instructions re amendments / deletions


  • When requesting an amendment provide the actual wording of the actual clause you want.


  1. Letter to Lessor’s solicitor requesting amendments / deletions


  1. Attend to execution of lease with client, request cheques for registration


  1. Return executed documents with cheques, request copy of registered lease from Lessor’s solicitor.


  1. Bill client