Assignment of a Lease – Retail Shop Leases Act

If you are buying or selling a retail business with a lease, or if you are a landlord involved in a business sale by one of your tenants it is important you are aware of your disclosure responsibilities under the Retail Shop Lease Act (“the Act”). 

Assignor Disclosure Obligations

When the lease assignment is in connection with the sale of a retail business by the assignor to the assignee, the assignor must give the assignee an assignor disclosure statement as well as a copy of the current lease at least 7 days before the earlier of:

  • The day or which the assignee enters into the business sale contract, or
  • The day the lessor is asked to consent to the assignment.

The disclosure obligation has changed recently as a result of recent amendments to the Act.  Previously the requirement was to provide the assignor disclosure statement 7 days before the lessor was asked to consent to the assignment.

It is now possible for the assignee to waive the 7 days period with a waiver notice, provided they have already been given a copy of the assignor disclosure statement and a copy of the current lease.

The assignor must also give the lessor a copy of the assignor disclosure statement given to the assignee on the day the lessor is asked to consent to the assignment.  The lessor must respond to the request for the assignment of the lease within one month and failure to do so will result in the assignor having the right to bring a retail tenancy dispute before the Queensland Civil and Administrative Tribunal (QCAT).

Assignee Disclosure Obligations

The prospective assignee must give an assignee disclosure statement to the assignor before the lessor is asked to consent to the assignment.

The prospective assignee must also give an assignee disclosure statement to the lessor before the assignment is entered into.

For the purposes of the Act, an assignment is deemed to be entered into on the earlier of:

  • The date by which the deed of assignment is signed by landlord, tenant and assignee.
  • The date the assignee, with the consent of the landlord, takes possession of the premises.

Lessor Disclosure Obligations

The lessor must give the prospective assignee a lessor disclosure statement as well as a copy of the lease at lease 7 days before an assignment of a retail shop lease is entered into.

It is possible for the assignee to waive this requirement for a 7 day period with a waiver notice and a legal advice report, provided they are given a copy of the lessor disclosure statement and a copy of the lease.

Failure by any party to provide a required disclosure statement

If a disclosing party fails to comply with the disclosure requirements then a retail tenancy dispute may exist between the parties.  Unlike a situation of failure to provide a disclosure statement upon the commencement of a new lease, here there is no automatic right to terminate the assignment.

If it is within 2 months after the assignment is entered into, the party should have received the disclosure statement. 

We are happy to help with any retail or commercial leasing matter you may have.  Contact Geoff Neilsen (Geoff.Neilsen@activelaw.com.au) if we can be of assistance.


Disclaimer – Reliance on Content
The material distributed is general information only. The information supplied is not and is not intended to be, legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.