Commercial Tenancy (Retail Shops) Agreements Amendment Regulations 1999 (WA)
PRINT POST APPROVED PP665002/00041
18 June 1999] WESTERN GOVERNMENT GAZETTE, WA 2599 2599 AUSTRALIAN
GOVERNMENT
PERTH, FRIDAY, 18 JUNE 1999 No. 107 SPECIAL
PUBLISHED BY AUTHORITY JOHN A. STRIJK, GOVERNMENT PRINTER AT 3.00 PM
COMMERCIAL TENANCY (RETAIL SHOPS)
AGREEMENTS ACT 1985
COMMERCIAL TENANCY
(RETAIL SHOPS)
AGREEMENTS
AMENDMENT
REGULATIONS 1999
2600 GOVERNMENT GAZETTE, WA [18 June 1999
18 June 1999] GOVERNMENT GAZETTE, WA 2601
Commercial Tenancy (Retail Shops) Agreements Act 1985
Commercial Tenancy (Retail Shops) Agreements
Amendment Regulations 1999
Made by the Governor in Executive Council.
1. Citation
These regulations may be cited as the Commercial Tenancy
(Retail Shops) Agreements Amendment Regulations 1999.
2. Commencement
These regulations come into operation on 1 July 1999.
3. The regulations amended
The amendments in these regulations are to the Commercial
Tenancy (Retail Shops) Agreements Regulations 1985*.
[* Published in Gazette 30 August 1985, pp. 3121-7.For amendments to 28 May 1999 see 1998 Index to
Legislation of Western Australia, Table 4, p. 42.]
4. Regulation 5A inserted
After regulation 5 the following regulation is inserted —
“
5A. Standard trading hours prescribed (section 12(1)(c)) In accordance with section 12(3), and for the purposes of section 12(1)(c), “standard trading hours” are —
(a)
8.00 am to 6.00 pm Monday, Tuesday, Wednesday and Friday;
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(b) 8.00 am to 9.00 pm Thursday; and (c) 8.00 am to 5.00 pm Saturday. ”.
5. Regulation 7 amended
Regulation 7 is amended by deleting “$20.20.” and inserting instead —
“ $29.00. ”.
6. Regulation 9 inserted
After regulation 8 the following regulation is inserted —
“ 9. Tenant Guide prescribed (section 6A(4))
(1) The tenant guide shall be in the form of Form 6. (2) The tenant guide is to be located at the front of the
retail shop lease to which it relates.”.
7. Schedule amended
(1) Form 1 in the Schedule is amended as follows:
(a) under the heading “DISCLOSURE STATEMENT” in the paragraph commencing “This Disclosure Statement” by deleting “and a copy of the current year's itemized variable outgoings” and inserting instead —
“ , a Tenant Guide and a copy of the current
year's itemized operating expenses
”;
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(b) WARNING TO TENANT under the heading “” by “ operating expenses ”;
(c) CENTRE/BUILDING
DETAILS:” by deleting “Current Total Gross Leasablein Part A, under the heading ““ Current Total Lettable Area of Centre/Building ”;
(d) in Part A, under the heading “PROPOSED TENANCY DETAILS:” in item 1 by deleting the paragraph commencing “Gross leasable area” and inserting the following paragraph instead — “
Current total lettable area (if a retail shopping centre) or retail floor area of the retail shop (area as set out in the lease or as ascertained by a licensed surveyor and agreed by the parties)
”;
(e) in Part A, under the heading “PROPOSED TENANCY DETAILS:” in item 3 by deleting “shop front (if any)” and inserting — “ shop front or fit-out (if any) ”;
(f) in Part A, under the heading “PROPOSED TENANCY DETAILS:” in item 3 by deleting “(If yes, details are attached)” in the second place where it occurs and inserting instead —
“
(If yes, full details, including any amortization
arrangements, are attached)
”;
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(g) in Part A, under the heading “PROPOSED TENANCY DETAILS:” in item 4 by deleting “ Formula or basis for reviews (Delete if not applicable)
Consumer Price
Index
Fixed Percentage
increase
Market value Pre-set rent amounts
Aggregate of previous rents
Other:
——————————
——————————
Reduction of rent possible on review YES NO
Rent payable EXISTING PROPOSED OTHER during a RATE RATE review dispute
”
and inserting instead —
“
Period Basis for review …………………... …………………………….. …………………... …………………………….. …………………... …………………………….. (NOTE: Rent cannot be increased or decreased during a rent
review dispute, but any increase or reduction that takes place after
a resolution or determination of a dispute may be due from the dateof the review)
”;
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(h)
in Part A, under the heading “PROPOSED TENANCY DETAILS:” in item 5 —
(i) Variable Outgoings by deleting “” and inserting “ Operating Expenses ”;
(ii) by deleting “Variable outgoings” and inserting “ Operating expenses ”; and
(iii) by deleting “variable outgoings” in the 3 places it “ operating expenses ”;
(i) in Part A, under the heading “PROPOSED TENANCY DETAILS:” by deleting the notes to item 5 and inserting the following notes instead —
“
NOTE: For a list of the operating expenses payable by the Tenant refer to the current budget attached and to Lease Clauses……….and………, and for the formula
for the Tenants contributions to the Landlord’s
expenses see Lease Clauses……….and………. These
contributions are subject to the “relevant proportion”as defined by the Act (s. 12)
NOTE: The proportion of the total cost of operating expenses
for the Centre/Building payable by the Tenant might
vary periodically.
”;
(j) PROPOSED TENANCY
DETAILS:” in item 6 by deleting “outgoings” andin Part A, under the heading ““ operating expenses ”;
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(k)
in Part B in the list of requirements following the note “(Delete if not applicable)”:
(i) above the item “Air conditioning” by “ After hours access ”; and
(ii) after the item “Telephone/facsimile/radio” by
inserting —
“Tenancy cleaning ”.
(2)
Form 2 in the Schedule is amended by deleting “Dated this …………… day of ………… 19……….” and inserting —
“ Dated: ”. (3) Form 3 in the Schedule is amended as follows:
(a) by deleting “(a) a lease dated the ……….. day of ………..19……….,” and inserting — “ (a) a lease dated …………, ”;
(b) by deleting “of lease dated the ……….. day of ………..19……….” and inserting — “ of lease dated ………… ”;
(c) by deleting “expires on the ……….. day of ………..19……….” and inserting — “ expires on ………..……… ”;
(d) by deleting “expiring on the ……….. day of ………..19……….” and inserting — “ expiring on ………..……… ”;
(e) by deleting “Dated the ……….. day of ………..19……….” and inserting — “ Date: ………………..………… ”.
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(4) Form 4 in the Schedule is amended after item 8 by deleting “(Cheques are only to be made payable to the Commercial
Tribunal).Dated ______ 19______” and inserting — “ (Cheques are to be made payable to the Ministry of
Justice).
Date: ____________
”.
(5) Form 4 in the Schedule is amended under the heading
“INFORMATION FOR APPLICANT” as follows:
(a)
by deleting the definition of “retail shop lease” and inserting the following definition instead —
“
“retail shop lease” means a lease that provides for the occupation
of a retail shop other than where —
(a) the total retail floor area to which that lease applies (including, in the case of a building with 2 or more floor levels, the area of every floor level or part thereof to which that lease applies) exceeds 1 000 square metres; (b) the lease is held by a corporation within the meaning of the Companies (Western Australia) Code 2 that would not be eligible to be incorporated in Western Australia as a
proprietary company, or that is held by asubsidiary of such a corporation;
”;
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(b)
by deleting the definition of “retail shop” and inserting the following definition instead —
“
“retail shop” means —
(a) any premises situated in a retail shopping centre that are used wholly or predominantly for the carrying on of a business; and (b) any premises not situated in a retail shopping centre that are used wholly or predominantly for the carrying on of — (i) a business involving the sale of goods by retail; or
(ii) a specified business,
but does not include premises used wholly or partly for the
carrying on of a business involving the retail sale of petrol or
diesel to be used to propel vehicles on public roads, other than
premises used for that purpose by a tenant under a lease from a
landlord who is not a party to a franchise agreement within the
meaning of that expression in the Petroleum Retail MarketingFranchise Act 1980 of the Parliament of the Commonwealth;
”;
(c)
by deleting the definition of “retail shopping centre” and inserting the following definition instead —
“
“retail shopping centre” means a cluster of premises —
(a) 5 or more of which are used wholly or predominantly for the carrying on of —
(i)
a business involving the sale of goods by retail; or
(ii) a specified business; and
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(b) all of which —
(i) have, or upon being leased would have, a common head lessor; or
(ii) comprise lots on a single strata plan under the Strata Titles Act 1985,
whether the premises are in a single storey building or
a multi-level building;
”;
(d) in the definition of “specified business” by deleting “as at December 1992, these were” and inserting instead —
“ these are ”;
(e)
after the words “Section 3 (3) of the Act reads as follows” by deleting the extract of section 3 (3) and inserting instead the following —
“
“3.(3) A reference in this Act to a question arising under a retail shop lease includes a reference to —
(a) a question whether or not a lease exists or has existed; (b) a question whether or not a lease is or was a retail shop lease; (c) a question arising — (i) in relation to any communication, including a disclosure statement under section 6, between the parties to the retail shop lease, prior to their
entry into the retail shop lease, which
communication was material to the terms and
conditions of the retail shop lease; or(ii) in relation to the retail shop lease under a
provision of this Act;
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(d) a matter that is in dispute between the landlord and the tenant under section 12 in relation to — (i) operating expenses of the landlord under the retail shop lease generally;
(ii) an allocation made under section 12(1)(b) of the proportion of those operating expenses; or
(iii) a determination of the relevant proportion for the purposes of section 12;
or
(e) any other matter that is in dispute between the landlord and the tenant in connection with the retail shop lease, whether or not that matter is dealt with by the provisions of the retail shop lease. ”.
”.
(6) Footnote 1 to Form 4 in the Schedule is deleted. (7) Form 5 in the Schedule is amended as follows:
(a) by deleting “ on the …………. day of ………………..19……….” and inserting — “ on ………………….. ”;
(b) by deleting “ Dated this …………. day of ………………..19……….” and inserting — “ Date: ………………….. ”.
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(8) After Form 5 in the Schedule the following Form is added —
“
FORM 6
Commercial Tenancy (Retail Shops) Agreements Act 1985
[Section 6A]
::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
TENANT GUIDE
FOR NEW RETAIL SHOP LEASES FROM 1 JULY 1999
::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
TO THE NEW TENANT (“LESSEE”)
Entering into a lease of retail shop premises for your business means you are entering into a contract that creates binding legal obligations between yourself and the Landlord (“Lessor”).
Before you enter into a lease, you should fully understand your obligations, liabilities and rights under the lease.
The Commercial Tenancy (Retail Shops) Agreements Act 1985 (and its amendments) contains provisions regulating retail shop leases, many of which will over-ride any contrary provision in a lease.
A lease provision that is contrary to the provisions of the Act has
no effect (“void”).
.
To make sure you understand your obligations, liabilities and rights before entering into the lease you should:
♦ carefully read this Tenant Guide; page 11
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♦ carefully read any Disclosure Statement provided by the landlord or the
landlord’s agent;♦ carefully read any written lease document; ♦ obtain independent advice.
This Tenant Guide is merely a guide intended to help you to understand some of your legal obligations under a retail shop lease and, in particular, to understand your rights under the Act. You should not rely on this Guide as a substitute for reading the documents and obtaining independent advice before signing any Offer to Lease, Agreement to Lease, or any other related documents.
ADVICE BEFORE ENTERING THE LEASE
The Act provides that your retail lease will “commence” either —
When you take possession of the keys to the shop premises; or
When you commence paying rent; orWhen both parties sign the lease.
You should get independent advice before doing any of those
things.
Experts in the fields of legal, financial, business, taxation and property matters will be able to help you make the decision to enter into a lease or an agreement to lease and the terms of the contract that should be negotiated.
For legal advice, you should consult a solicitor with experience in commercial property and preferably in retail shop leasing matters.
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Industry advice is also available from experts in accounting and valuation as well as retail representative groups and tenant advocates. The Western Australian Government’s Small Business Development Corporation (SBDC) is also a source of guidance to prospective tenants.
You should understand the terms of the lease before signing it. All elements in a lease agreement eg rent, term, options, outgoings and related costs such as documenting the lease need to be understood by you. These matters are open to negotiation with the Lessor but the basis of your agreement is subject to the provisions of the Act.
DISCLOSURE STATEMENT (S.6)
The Lessor must provide you with a “Disclosure Statement” before you enter a new retail shop lease.
You can terminate the lease at any time up to 60 days after the lease was
“entered into” —
♦ if the Disclosure Statement is not given to you at least seven days before
the lease is “entered into”; or♦ if the Disclosure Statement contains false or misleading information. You can go to the Commercial Tribunal and get an order for compensation for any pecuniary loss suffered as a result of —
♦ not being given a Disclosure Statement; or ♦ false or misleading information contained in a Disclosure Statement. page 13
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The Disclosure Statement is to be in a prescribed form (Regulation 4 Form 1)
and is to contain all oral and written agreements and representations made by
the Lessor or through his/her agent(s) in negotiations together with relevantinformation including but not limited to:--
♦ details of the Lessor’s property such as the total lettable area, tenancy mix
and lettings, support services and management practices;♦ details of the shop premises location, area and services together with the
terms and conditions of the commercial tenancy such as asking rent, period
of lease plus any options to extend the agreement and rent review periods
and basis for the review;♦ contributions to the landlord’s expenses (operating expenses); - the Lessor’s
interest in the shopping centre or building; and - any additional charges
payable by the Lessee such as shop fitout or contributions to marketing and
sinking funds.In turn, the Lessor may ask for details of your retailing experience and of your financial capacity to establish and trade profitably and professionally. This may involve you presenting a satisfactory business plan to the Lessor.
If you require any special fitout or services for your tenancy, you will certainly need to formally disclose these to the Lessor along with any other evidence to support your case.
The Lessor doesn’t have to lease the shop premises if it appears that a business will not add value to the property investment. Your disclosure, like the Lessor’s, must be correct and contain no misleading information. Otherwise, the Lessor could institute legal proceedings against you outside the provisions of the Act.
You should understand the “Disclosure Statement” before signing it.
In signing the Disclosure Statement you are acknowledging you understand the basis for the retail lease with the Lessor. It is vital that you satisfy yourself, through prior enquiry, particularly taking appropriate legal and expert advice on
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all relevant information regarding the retail shop and (where applicable) the
shopping centre building and property.
TENANT GUIDE (S.6A)
A new retail shop lease must include this “Tenant Guide” at the front of the lease.
You can terminate the lease at any time up to 60 days after the lease was
“entered into” if there was no “Tenant Guide” provided with the lease.
You can go to the Commercial Tribunal and get an order for
compensation for any pecuniary loss suffered as a result of not being given a“Tenant Guide”.
PREMISES COVERED BY THE ACT (s.3)
Generally
ł The Act covers a retail shop where the premises are being used wholly or
predominantly for a business involving the sale of goods by retail.
However other premises trading in a retail shopping centre ( where there are
5 or more retail shops) are also covered by the Act.ł The Act and its requirements only apply to retail shop leases when the
shops have a retail floor area that does not exceed 1 000m2 .A prospective retail tenant should establish the area under the
lease and have this surveyed (if none is available) as early as
possible in the agreement – especially in preparation for a net rent
lease.
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Specifically
Certain types of specified business are also covered including drycleaning, hairdressing, beauty therapy, shoe repair and video stores and some petrol station agreements.
If you are not sure whether your business is covered by the Act,
get advice.
TERM OF THE RETAIL SHOP LEASE (s.13)
Minimum of 5 years
If you are entering a new retail shop lease for the first time, the Act provides you with a right to a minimum of a five year lease to help you establish and develop your business. This can be a combination of term and options to extendyour lease to the 5 year period (Regulation 6 Form 3).
Can be longer… or shorter
The tenure you negotiate can be greater than five years. Under some circumstances, you can also agree with the Lessor to a term shorter than five years but this must be your decision. (The approval of the Registrar should be sought in these circumstances). It would be prudent to take expert advice on the implications for your business if you do not take up the Act's 5 years’ tenancy right.
Fixed period
A lease is for a fixed period.
At the end of the lease…
At the end of the current term and your use of any options, the Lessor does not have to renew the agreement and the Lessee has no further rights to occupy the premises. All outstanding obligations under the lease should have been satisfiedat this time. After the expiry of the lease agreement your continued occupancy of the premises will be at the Lessor’s sole discretion. This interim period may be on a month to month basis.
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Options in the lease your occupancy are recorded by you allowing a sufficient lead time to exercise the option by the date set out in the terms of the lease. That option will lapse unless you inform the Lessor that you wish to renew your lease (exercising your option) in the manner and timeframe as set out in the lease document.
STRUCTURING YOUR LEASE
Assume you won’t be able to renew
You should not rely on a new lease being entered into at the end of the lease
period.Therefore you should:
♦ Base your cashflows on the assumption that the lease will probably not be
renewed.♦ Adopt a prudent business practice, which amortizes the costs of your
business, and the cost of the goodwill, if you purchased the business, over
the period of the lease.♦ Recognise the worth or value of the goodwill of your retail business is
directly related to the tenure you hold. The balance of the current lease term
and any options are prime factors that the market will assess in determining
the goodwill attached to your business.♦ Decide on the level of profit that you expect to achieve over the period of
the lease.Does the lease include redevelopment or relocation clauses? Commercial and retail property investments need to be constantly promoted. This can involve redevelopment of premises with works by the Lessor that can significantly impact on your retail business. To safeguard your interests you will need to carefully consider any redevelopment or relocation clause in the proposed lease. If you agree to such a clause you should negotiate to ensure
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that your retail business will not be in any worse situation as a result of the commitment from the Lessor for a new shop in the redevelopment. This could also provide for a new location and rental levels comparable with your current position.
Compensation issues also need to be specified in cases where your trade will be affected due to a less favourable shop location or higher rental structure or no new shop can be provided for your business.
Can the Act help?
The Act empowers the Registrar of the Commercial Tribunal to consider special circumstances in approving redevelopment and relocation applications by the Lessor. The interests of both Lessee and Lessor are considered in these cases but may not meet all your requirements that you could have negotiated earlier in establishing the lease terms and conditions.
RENT REVIEW (S. 11)
Only use one method of review at a time
If you have agreed to a review of your shop rental, then at each review time a single basis of rent review is to apply. For example, this single basis to be specified in the Disclosure Statement (Regulation 4 Form 1) can include, but is not limited to:
♦ Market Rent. ♦ Consumer Price Index (CPI). ♦ Percentage increase. ♦ An agreed formula or combination, eg. CPI + IO%. The lease, however, cannot give the Lessor the right to choose the greatest return from a range of rent types at any one review.
Can use a different method next time
The types of review may vary over the life of the lease, for example Year I CPI ,Year 2 Market rent, Year 3 a fixed increase then a higher rate if turnover
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exceeds an agreed level, Year 4 Market rent, Year 5 CPI + a percentage
increase.
No “ratchet” clauses
ratchet clause) such that the rent can never fall or go below a fixed level. The lease must allow your rent to rise or fall to a level supported by market evidence.
The role of the Act and the Registrar
In a market rent review, the Act provides that both parties can:
(i) initiate the market rent review process,
(ii) appoint a single licensed valuer to determine the new rental, or(iii) each appoint a valuer to represent their interests.
In the case of disagreement the new rent may be referred to the Commercial
Registrar for determination.Until both parties agree to the new rent level or the Registrar determines the new rent, the current rent will continue to apply. Once the higher or lower rent is agreed, adjustments will be backdated to the review date. The rate of repayment between the parties can be varied at the Registrar’s discretion if the Registrar has determined the rent.
RENT BASED ON TURNOVER (s.7 & s.8)
Steps needed to base the rent on turnover
business then that agreement must be based on an agreed formula and must be formalized in writing on a prescribed form (Regulation 5 Form 2).
The Act also recognizes the confidentiality of such figures to a retail business and limits the release and use of this information strictly in accordance with your agreement with the Lessor.
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CONTRIBUTION TO LANDLORD EXPENSES (S.12)
Only “operating” expenses not “capital” expenses
The landlord’s expenses are described in the Act as operating expenses. Leases can also refer to them as ''outgoings or variable outgoings ". They are costs in operating, repairing, or maintaining the Lessor's premises including any building common areas. Typically these costs are the rates and taxes, cleaning, airconditioning, security, insurances and other valid expenses of running the property. No capital expenditures (eg asset replacement) are recoverable operating expenses.
Operating expenses and their payment are to be set out in the Disclosure
Statement (Regulation 4 Form 1) and the budget attached to the lease provided
by the Lessor.
You can not be asked to pay management fees — these are costs to the
Lessor that are not recoverable from retail tenants.
Contributions are negotiable, but not to exceed your “relevant proportion”
Your contributions to landlord expenses are negotiable. Whilst you may agree to a different form of contribution, the Act provides that the upper limit of the operating expenses that you can be reasonably asked to contribute to is your
relevant proportion.This share at the start of the accounting year is represented by the area of your shop’s retail floor area in relation to the total lettable area of the shopping centre or cluster of shops.
i.e.: retail floor area in shop total lettable area = relevant proportion
The Registrar of the Commercial Tribunal can decide on any disagreements in these matters and in certain circumstances can vary the relevant proportion during the year.
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Other expenses directly attributable to your business (called “referable” expenses) for example, specialized cleaning incurred by only a few tenants, are subject to the relevant proportion limit of the shops incurring those costs.
NOTE: Rental agreements are generally —
♦ on a “net” basis (rent plus a contribution to operating expenses); or ♦ on a “gross” basis (an all inclusive payment for all your shop
occupancy costs); or♦ another similar version.
You should seek expert advice as to the basis that best suits your business operations.
Audit and accounting standards – Lessors obligations
timetables for preparing budgets, providing end of financial year expenditure statements and distributing audit costs particularly on net rental agreements.
Lessor to provide estimates and statements
contribution to the Lessor's operating expenses until one month after the Lessor provides you with an annual estimate of expenditure for each operating expense.
The Lessor is also required to supply you with an audited operating expenses statement within 3 months after the previous accounting period has ended. If this is not done you do not have to contribute to the Lessor's operating expenses
until you have received the audited statement.
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SINKING FUNDS (s.12A)
Act protects your contributions
If your retail shop is in a shopping centre and you have agreed to contribute to a fund for major repair and maintenance works, your contributions are protected under the Act. These moneys are subject to accounting and audit provisions with no funds being able to be expended on capital works. These are the rightful responsibility of the Lessor and would include the construction of new extensions and the replacement of major plant and equipment.
OTHER FUNDS AND RESERVES (s.12B)
Other contributions are also protected
The Act also extends protection to any other funds and reserves that you agree to contribute to for specific or marketing or promotion purposes. Again the Lessor is required to properly account for the collection administration, expenditure and auditing of these funds.
HOURS OF OPERATION (s.12C)
Your opening hours are flexible
A provision in a retail shop lease which requires you to open your premises at specified hours or times is invalid (void) under the Act.
As you have the discretion to open (or close) your business at times of your choice the Lessor can not refuse to renew your lease because of your actions. If in the future you believe this to be the reason that your lease was not renewed you may apply in writing to the Tribunal for compensation.
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STANDARD TRADING HOURS AND THE COSTS OF
OPERATIONYour retail business will be responsible for a share (limited to the “relevant proportion”) of agreed operating expenses arising from trading within standard trading hours.
NOTE: “Standard Trading Hours” are prescribed as —
(a) 8.00 am to 6.00 pm Monday, Tuesday, Wednesday and Friday;
(b) 8.00 am to 9.00 pm Thursday; and
(c)8.00 am to 5.00 pm Saturday.
(see regulation 5A.)
If your retail shop is enclosed in a shopping centre then for practical reasons the opening and closing times (core hours) for the centre may be less than the standard trading hours. These matters will need to be clarified in disclosure by the Lessor.
If you do not open outside standard trading hours, you can not be required to make a contribution to the expenses related to the extended hours.
If you open outside the standard trading hours, you will be charged a contribution to the expenses related to the extended hours. These are referable expenses and are limited to the relevant proportion of those shops which open during the extended hours.
ASSIGNMENT AND SUB-LEASING (S.10)
Your responsibilities if you sell or sublease your business
Assignor) and any guarantor to your lease can not be held liable for the performance of the ingoing tenant (the Assignee) or for any moneys including any rent owed by the ingoing tenant from the assignment date.
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The Lessor can not withhold consent to an assignment, except on reasonable grounds. The Lessor may however recoup reasonable expenses in investigating the proposed assignee for your lease.
You are entitled to assume the Lessor’s approval to the assignment if you have not received a reply within 28 days after seeking that approval in writing.
If you choose to sub-lease part of your premises you will be required to seek the
Lessors approval and also provide a Tenant Guide and Disclosure
Statement to your Lessee. The sub-lease will not exclude you from your
existing liabilities to the Lessor.
VOID CLAUSES (S. 1 5)
Lease provisions and other oral and written agreements cannot include clauses that are contrary to any provision in the Act.
In addition, the lease or other side agreements or oral agreements can not —
♦ require you to pay key money (s.9), which is any moneys or other benefits
in addition to rent paid to the Lessor or others for the right to lease retail
shop premises.♦ require you to disclose your turnover figures to the Lessor unless you agree
on turnover as a basis for your rent assessment (s.7) and have completed
Regulation 5 Form 2;♦ prevent you from choosing to disclose the rent you have agreed to third
parties (s.11) such as other retail tenants or their Valuers; or♦ require you to contribute to any fund that applies those moneys to capital
expenditures (s.12) such as new building works in shopping centres.Some clauses may appear to create or limit aspects of the lease in an unfair or “unfriendly” way. If you are uncomfortable with the effect of any clauses in the lease, seek expert advice.
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r. 7
COMPENSATION BY LANDLORD (s.14)
The Act provides that, for shopping centre properties, the Lessor can not adversely affect your retail business trading in a retail shopping centre through action or inaction in:
♦ inhibiting your access and that of customers to your shop premises; ♦ disrupting trading conditions causing loss of profits to your business; or ♦ not properly repairing, maintaining or cleaning the shopping centre
premises or common areas.You should keep in mind the type and quality of services provided by the Lessor in relation to your contributions and those of all tenants in the centre. A Merchants Association can assist in coordinating the interests of all retail tenants to ensure the quality of management, cleaning and other property services support your retail businesses.
Only after your written request and a reasonable time has been given to the been adversely affected by the Lessor.
Lessor to correct the problems should you take your grievance to the
Commercial Tribunal. To support a claim, you need to demonstrate to the
DISPUTES BETWEEN THE LESSEE (TENANT) ANDLESSOR (LANDLORD)
The Act may be able to help…
Lessor or through the Lessors property agents, the Act authorizes the Commercial Registrar to deal with these disputes as “a question arising”. Either the lessee or the lessor may initiate this action with the Registrar by submitting the information required by Form 4 (Regulation 7) and payment of the prescribed fee (as at 1 July 1999, this was $29).
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2626 GOVERNMENT GAZETTE, WA [18 June 1999 Commercial Tenancy (Retail Shops) Agreements Amendment Regulations 1999
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…informally.
The Act sets out an informal dispute resolution procedure before the Registrar, as a mediator, to achieve solutions that are quick and inexpensive to the parties (s.16). The Registrar can determine, for example, rent reviews (s.11) and shop relocation agreements (s.13).
…formally.
The Commercial Tribunal can deal with more complex matters that are referred to it by the Registrar (s.22). This is the recommended course before any Court action is contemplated by the parties.
Advice in such matters can be obtained from solicitors with property experience, the SBDC, industry sources, tenant advocates and retail
representative groups.
To avoid disputes, get everything in writing
To reduce the possibility of a dispute, before entering a lease you should obtain confirmation in writing of any oral representations made during the negotiations. These representations should be included in the DisclosureStatement and might include:
♦ customer traffic numbers;
♦ exclusive rights to sell product lines; ♦ other tenancies as competitors; ♦ the existence and continuance of major tenants in the centre, and ♦ marketing support by the Lessor and related costs. ”.
By Command of the Governor,
M. C. WAUCHOPE, Clerk of the Executive Council.
By Authority: JOHN. A. STRIJK, Government Printer.
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