Margaret Quirk

Margaret Quirk

Minister for Corrective Services; Small Business

    What happens to a retail lease when the shopping centre is sold?

    31/01/2008 12:00 AM


    The global liquidity squeeze has reinforced the need for small business tenants to preserve and protect their leasehold rights.

    Small Business Minister Margaret Quirk said many small businesses risked losing thousands of dollars when a new landlord took over a shopping centre.

    A simple caveat in their lease agreement would protect them.

    “If a small business has a retail shop lease exceeding five years, particularly in a shopping centre, the owners should seek urgent legal advice as to whether lodging a subject to claim caveat is the appropriate action,” Ms Quirk said.

    According to the Small Business Development Corporation (SBDC) a ‘subject to claim caveat’ is different from an absolute caveat which most retail lease agreements disallow.

    The Minister said it was advisable that caveat documents were prepared and lodged by a solicitor.

    “If the shopping centre is sold and the lease which exceeds five years is not protected by caveat, it is possible that the new owner will not have to honour the lease,” she said.

    “Tenants with existing shopping centre leases for five-year terms with no further options to renew are unlikely to be affected by a change in ownership, particularly if it is the first five years of occupancy under a new retail shops lease.”

    Most retail leases in Western Australia were regulated by the Commercial Tenancy (Retail Shops) Agreements Act 1985.

    The SBDC provides free guidance to landlords and tenants on their rights and obligations and receives in excess of 2,600 retail tenancy inquiries per year.

    For further information, or to order a copy of SBDC’s latest publication ‘How to negotiate your way to a better retail lease’, contact an SBDC commercial tenancy adviser on 131 BIZ (131 259).

    Minister's office - 9213 7000