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Periodic or Fixed-term Retail Lease?

Discussion in 'Property Management' started by Bill, 16th Jul, 2016.

  1. Bill

    Bill New Member

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    16th Jul, 2016
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    Location:
    SE QLD
    I own a cafe which may be sold in the next 3 months. I don't know if the potential new owners want to continue the current leasing arrangements or run it themselves, but it will be sold 'as a going concern'. Currently the lessees have an annual lease with a month's notice to quit. My solicitor for the sale isn't happy with the current lease and wants it updated (and wants to charge me $3000 for the pleasure!). Which kind of lease would give me the most flexibility if I should sell (assuming the normal 6-week settlement timeframe)? And if I use a Periodic Lease, is that the same document as the normal Qld Retail Lease (2013), as I've looked at this and it seems to be geared at longer durations, requiring 6 months notice to quit, which is no good for me.
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    @Bill - you've confused me (not that hard).

    • Do you own the building, operate the café or both (in separate entities)?
    • If there is a lease on foot, the purchaser has no choice but to continue with that lease.
    • A renewal of retail lease has each party pay their own costs - it shouldn't cost $3k
    • Without seeing the current (expired) lease, you say they are on an annual lease but can give 30 days notice - that does not make sense.
    • Selling as a going concern relates to the gst liability on the building. Are you selling the freehold or the leasehold?
    • There is no periodic lease document, the tenant holds over on the same terms as the current lease. No cost involved.
    • If the lease is on holdover, finance may be an issue for a purchaser (as the vendor, you must offer a new 5 year term but the lessee may request anything less)
    • Have a look at the Fair Trading website (google retail leases act Qld), the retail tenancies unit should have some pdf downloads available
     
  3. Bill

    Bill New Member

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    Location:
    SE QLD
    Thanks for that. I own the cafe and land it's on, and lease it out, and we're planning on selling the lot (freehold). The current lease isn't the latest version as it was one I downloaded about 3 or 4 years ago, (whilst the latest retail lease is the 2013 one). The current lease was signed back in 2014 and expired in 2015, though it had a clause saying it could continue on the same terms if it wasn't renewed or cancelled. I inserted a clause giving 30 notice by either party as I knew we would be selling sometime, so maybe this wasn't Kocher? So it looks like it would be better to have a new lease, but the fixed one is no good for a sale this quarter, and the periodic one would be based on the current 'old' and amended one. I'm suprised there isn't a Periodic Lease document as such.
     
  4. RPI

    RPI Property Lawyer, Town Planner Business Member

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    19th Jun, 2015
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    Location:
    Brisbane
    Its a pity it is a Retail Lease, commercial lease would be half that. Even with a RSL it seems close to $1k higher than market. There is a lot more work in those unfortunately.

    The new RSL act is going to remove a lot of the properties from the act and concentrate it on where it should be, the Westfields.
     
    Scott No Mates likes this.
  5. Bill

    Bill New Member

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    Location:
    SE QLD
    I have discovered what I think will work. If you have a less than 6-month lease then the 1994 Act doesn't apply. So you don't need Financial and Accounting disclosures, and presumably you can set your own renewal timeframe to whatever you want (I prefer 1 or 2 months) as long as both parties agree. This appears to be called a short-term lease, or may also be called a Periodic lease (are these the same)?