Western Australia Retail Tenancy Laws
Many Australian state governments have expanded their concept of consumer protection to include small business consumers, who were bargaining on a far from level playing field, where owners of large shopping centres had all the advantages and all the power. The western Australian government seek to provide this protection by making sure that prospective tenants have sufficient information to make sound business decisions when entering into or renewing a retail lease.
Recent amendments to the Commercial Tenancy (Retail Shops) Agreement Act 1985 in WA clearly offer further protection to tenants, the Government regarding them as the less powerful party in most retail leasing transactions. As a result, the amendments require greater responsibility and pro-active behaviour from the Landlords.
The Commercial Tenancy (Retail Shops) Agreement Act 1985 regulates Retail commercial tenancies in WA. The principal focus is on the need for transparency of information and fairness in the contract by:
- requiring a disclosure statement by the Owner (lessor ) to the tenant (lessee);
- establishing a consistent and fair process for rent reviews;
- giving the tenant an entitlement to a minimum lease period of up to 5 years;
- regulating the distribution of specified landlord expenses to tenants;
- provide access to alternative lower cost mediation and dispute resolution mechanisms offered by the State Administrative Tribunal.
It is important for landlords and tenants of retail premises and other businesses covered by the Act to establish the impact of the Act on their lease agreement.
Commercial Tenancy (Retail Shops) Agreement Act covers parties involved in retail/commercial leases for shop premises which are:
- up to but no greater than1000 square metres in area;
- tenanted by private businesses but not publicly listed companies and their subsidiaries;
- tenanted by non-retail businesses where located in a shopping centre (of 5 or more retail shops or specified businesses);
- the business carried out by the lessee is a specified business such as a dry cleaning, hairdressing, beauty therapy, shoe repair, video store or some petrol station agreements.
The Law in Western Australia , is very clear:
Section 15C (1) A landlord under a retail shop lease shall not, in connection with the lease, engage in conduct that is, in all the circumstances, unconscionable.
If a landlord fails to give sufficient information it is guilty of Unconscionable Conduct. A party who suffers damage by reason of misleading or deceptive conduct of another party may make a claim for compensation.
At the disclosure stage, Landlords and their agents will now be required to provide a copy of a retail tenancy guide to any prospective tenant as soon as negotiations are entered into. See s6A of the Act.
Tough penalties apply if you don’t provide this guide or if the statement is inaccurate. In particular, Commercial Tenancy (Retail Shops) Agreement Act 1985 renders void, lease provisions which require any tenant’s payment for contribution to fit out, that has not been disclosed in a disclosure statement.
The only way a tenant cannot end the lease in case of inadequate disclosure is where:
- the landlord has acted honestly and reasonably and ought reasonably to be excused for the failure concerned,
- the tenant is in substantially as good a position as the tenant would have been if the failure had not occurred.
Commercial Tenancy Forms and Act
The property owner or their agent is required to provide forms specified by Regulations under Commercial Tenancy (Retail Shops) Agreement Act to prospective tenants to enable a proper assessment of a lease proposal.
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