Retail leases act nsw demolition clause

What is a retail lease act? Can a landlord demolish a lease? The lease cannot be terminated on thatground unless and until the lessor has provided the lessee with details of theproposed demolition sufficient to indicate a genuine proposal for.

Demolition clauses are commonly inserted in retail shop leases to allow a landlord to terminate a retail shop lease if the landlord proposes to demolish the premises. However, strict legislative requirements must be met before a termination notice to permit demolition is issue including the requirement for a ‘genuine proposal’ to demolish. MJHQ Pty Ltd (the Lessee) was the lessee of a retail premises within a shopping centre complex. Clause permitted the Lessor to terminate the agreement and require the Lessee to vacate the premises if the Lessor sought to demolish, substantially repair, renovate or reconstruct the shopping centre complex which contained the Lessee’s premises.

The clause required the Lessor to provide days’ notice to the Lessee. The Lessor provided that it wished to demolish part of the Lessee’s shop premises as part of a plan to amalgamate it with two adjoining shops to establish a larger rental space. The notice did not contain any evidence of a finalised agreement with a builder to perform the proposed work, nor did it contain an indication as to how long the work would take.

Of further relevance to the Lessee’s case was the fact that the Lessor had previousl. See full list on aicnsw. The section provides that for a valid termination on the grounds of a demolition , the lessor must provide the lessee with details of the demolition that indicate a genuine proposal for demolition that will occur within a reasonably practicable time following termination.

Importantly, the Appeals Panel noted that the motivations of the Lessor are irrelevant in determining whether a proposal is genuine. It may only be relevant where that motivation demonstrates that there is in fact no genuine proposal to demolish. It was emphasised that the fact a demolition advances the commercial interests of the Lessor or is motivated by a desire to release the premises is not relevant in considering whether the proposal to demolish is genuine. So long as the proposal is genuine and demolition will occur within a reasonably practicable time after the giving of the notice, the Lessor’s private motivations are immaterial. In applying these principles to the case at han the Appeals Panel found in favour of the Lessor.

The Tribunal at first instance found that because there was no evidence of a tender, agreed builder or a proposed timeframe of the demolition work, it highlighted that there was no genuine proposal. However, the Appeals Panel found that section did not require work to be completed within a specific timeframe. All that is required is that the work is commenced and concluded within a reasonably practicable time after the termination of the lease. Furthermore, the Appeals Panel found that the fact the Lessor only had a preliminary agreement with a builder was justified given that this agreement was predicated upon the Lessor having entered into a tenancy agreement for the amalgamated premises with another proposed tenant. Thus, the evidence of the proposal contained within the Lessor’s notice was considered genuine and hence the Lessor was permitted to terminate its lease agreement wit.

A lessor may validly rely on a demolition clause to force a lessee to vacate a premises, even if the motivation behind organising for the demolition is purely to force a termination of the lease. A notice of demolition does not need to contain every specific detail of the demolition and need not indicate a specific timeframe for completion. However, the evidence must provide enough information of the proposed work to demonstrate that the proposal is genuine and that the work will commence and be completed within a reasonably practicable time.

Therefore, it is important for retail tenants to understand their rights under the retail leasing legislation in their state or territory. A retail premises leasethat provides fortermination of the leaseon the ground of proposed demolition of the buildingin which the retail premises are located is taken to provide as set out inthis section. The landlord cannot terminate the leaseonthat ground unless the landlord has—.

If a retail shop lease is terminated on the grounds of proposed demolition , the landlord is liable to pay the tenant compensation for the fit-out if the tenant is required under the lease to fit out the retail shop regardless of whether the demolition of the building is carried out or not. An Act to make provision with respect to the leasing of certain retail shops and the rights and obligations of lessors and lessees of those shops, and for other purposes. Leases to which Act does not apply 6A.

This Act overrides leases 8. Application of Act to retail shops in markets 7. When the lease is entered into PART - ENTERING INTO A LEASE 9. Copy of lease and retail tenancy guide to be provided at negotiation stage 10. Generally, Act not to apply to short-term leases Subject to subsection (2), this Act does not apply to a lease of a retail shop for a term of less than months without any right for the lessee to extend the lease (whether by means of an option to extend or renew the lease or otherwise). Section of the Act limits the operation of demolition clauses to provide security against an invalid termination. Demolition is defined as substantial repair, renovation or reconstruction of the building that cannot be carried out practicably without vacant possession of the shop. Blackler concerned s. Bryson J identified the question for determination as whether the notice itself provided sufficient details to indicate a genuine proposal.

A landlord may provide a demolition clause in a lease. The Act imposes certain requirements on a landlord who elects to terminate a lease in order to demolish the retail shopping centre or premises.