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Your Legal Rights Before You Sign a Retail Lease in NSW
Part 1A covered the commercial side of a shopping centre lease offer. This one covers the statutory side, and it is the more valuable of the two, because the Retail Leases Act 1994 (NSW) hands tenants a set of protections that almost nobody uses.
We see this on job after job. A tenancy coordinator asks for something at design approval that was never mentioned when the lease was signed, the tenant pays for it, and everyone moves on. In a lot of those cases the tenant was not obliged to build it at all.
This is general information rather than legal advice. Get a retail leasing solicitor across your specific lease. The point of this post is to tell you what to ask them about.
First: does the Act even apply to you
Everything below only matters if your lease is a retail shop lease under the Act. Broadly it applies where the premises are used for a business listed in Schedule 1 of the Act, or where the premises sit inside a retail shopping centre.
A retail shopping centre means a cluster of premises in common ownership or on the same strata plan, with at least five used for retail business, promoted or generally regarded as a centre, mall, court or arcade. If you are in a Sydney centre you almost certainly qualify, whatever your trade.
Sitting outside the Act:
Shops with a lettable area over 1,000 square metres
Leases of less than 6 months
Leases of more than 25 years
Premises operated by the tenant on behalf of the landlord
Shops inside cinemas, bowling alleys or skating rinks run by the same operator
Office premises above a retail shopping centre
That 1,000 square metre threshold is the reason a mini major or a full line supermarket negotiates with none of the protections below. It is also worth checking if your tenancy is anywhere near it, because falling on the wrong side changes your position completely.
The disclosure statement, and the six month window
Section 11 requires the landlord to give you a lessor's disclosure statement at least seven days before the lease is entered into. Separately, section 9 requires a copy of the proposed lease and the retail tenancy guide at the negotiation stage.
The disclosure statement is not a formality. It sets out the outgoings, the term, the permitted use, the centre details, the fitout requirements and the landlord's works. It is the document your later arguments get measured against.
If it was not given, or was incomplete, or contained information that was materially false or misleading at the time it was given, then under section 11 you may terminate the lease by written notice at any time within six months after the lease was entered into, and recover compensation for costs you reasonably incurred in connection with entering into it.
There is an exception, and it is narrow. It does not apply if the landlord acted honestly and reasonably, ought reasonably to be excused, and you are in substantially as good a position as you would have been anyway.
Practical version: keep the disclosure statement, keep the date you received it, and compare it against what you are actually being asked to do once the fitout starts. A material difference is leverage, and it has a six month clock on it.
Related, section 12A means you are not required to pay outgoings that were not disclosed to you. If a levy appears on a statement in year two and it was not in the disclosure statement, question it.
The clause that kills undisclosed fitout charges
Section 12 is short and it does a lot of work. A lease provision requiring you to pay, or contribute towards, the cost of finishes, fixtures, fittings, equipment or services is void unless the liability to make that payment or contribution was disclosed in the landlord's disclosure statement given to you.
Read that against the list of centre charges in part 1A. Design approval fees, plan check fees, hoarding, utility connection, isolations, temporary services. If a liability to pay for those was not disclosed to you before you signed, the provision imposing it may be void.
This is the same principle as section 13A but aimed at money rather than construction scope. Together they mean the same thing in practice: what was disclosed to you before signing is the boundary of what you owe. Keep the paperwork.
The clause that caps what the centre can make you build
This is the one worth reading twice.
Section 13A says that if a landlord requires a particular standard of construction for a fitout you are carrying out, the relevant information about that standard must be in a tenancy fit-out statement, which may be called a tenancy fit-out guide, and it must accompany the disclosure statement, or accompany or be included in the lease or agreement for lease.
Then subsection 2:
The lessee is not liable to carry out any fit-out of the kind referred to in subsection (1) to the extent that it is not covered by the tenancy fit-out statement.
Read that as what it is. The fit-out statement is a ceiling on your obligation, not a floor.
If the centre's design approval process comes back demanding a fire rated bulkhead, an upgraded grease arrestor, a particular shopfront framing system or a specific ceiling construction, and none of it was in the fit-out statement you were given, your liability to build it is limited by section 13A(2).
What to actually do about it
Be clear about what this section is and is not. It is not a licence to refuse the coordinator and keep building. Design approval is a gate, and you cannot open without passing through it. A tenant who digs in and loses four weeks of programme has spent more than the bulkhead cost.
So the honest position is that complying is often the right commercial call. What section 13A(2) does is change complying from an instruction you follow into a variation you negotiate. That is worth real money and it costs you nothing but one email.
The sequence that works:
Do not price it or build it yet. The moment you accept it as your scope, the position is gone.
Check the fit-out statement first, then the lease and the incorporated design guidelines. Confirm the item genuinely is not covered. Half the time it is covered and there is nothing to argue about.
Reply the same day, in writing, in neutral language. Something close to: "Happy to progress this. We note this item does not appear in the tenancy fit-out statement provided with the disclosure statement. Can you confirm the basis on which it is required and whether it is to be treated as a landlord cost or a variation."
Keep working on everything else. Do not let one item hold the whole approval. Ask the coordinator to approve the balance of the design and deal with this item separately.
Take a commercial outcome. In practice this usually lands on the landlord paying, a cost split, or the tenant doing it in exchange for extra time or a rent free week. A clean win where the item disappears is rare and it is not the point.
If they hold firm and the programme is at risk, build it and reserve your position in writing. Then it becomes a claim rather than a fight, and your solicitor can deal with it after you are trading.
The whole thing takes one email on the day the request arrives. Send it late, after the item is priced and drawn, and you have already accepted it by conduct.
Two qualifiers
Most leases expressly incorporate the design guidelines by reference, which makes them contractual in their own right. Do not assume a guideline is merely advisory, and do not tell a coordinator it is.
And section 13A(3) preserves section 38, the separate refurbishment and refitting power. A landlord may have a route to require works through that section instead. Get advice on how the two interact in your particular lease.
The cap on landlord works you are back charged for
Section 13 applies where you are liable to pay an amount for works carried out by or on behalf of the landlord. Think core holes, distribution board relocations, base building alterations done by the centre's own contractors.
The maximum amount of those costs, or a basis or formula for calculating them, must be agreed in writing before the lease is entered into, and you are not liable to pay more than that agreed maximum.
Uncapped back charges that turn up after the lease is signed do not sit comfortably with that section. If the centre is doing works on your behalf, get the cap in writing during negotiation, in the offer.
Special rent for a landlord funded fitout
If you are considering a turnkey deal, section 21 is the provision that permits it. Nothing in the Act prevents a lease providing for a special rent, on top of other rent, to cover the cost of fitout, fixtures, fittings and equipment installed by the landlord at the landlord's expense.
It is permitted, and it is not regulated as to rate. There is no statutory cap on what that special rent can be, which is exactly why part 1A recommended running the total over the full term rather than comparing weekly figures.
The demolition clause
Section 35 lets a landlord terminate for demolition, and demolition is defined broadly enough to include repair, renovation and reconstruction of part of a building. There are conditions. The landlord needs a genuine proposal, and generally must give at least six months written notice, reduced to three months where the term is twelve months or less.
Section 35(3A) provides compensation for your fitout when a lease is terminated for demolition, but only for items that cannot be removed, reinstalled or sold without you suffering a loss.
If you are spending three or four hundred thousand dollars on a fitout and the centre has a redevelopment on the horizon, this clause decides whether that money is at risk. Ask about the centre's redevelopment plans during negotiation and get the answer in writing.
Make good, flagged now and covered properly later
You will sign a make good clause at the start and pay for it at the end. Two things to do now rather than in five years.
First, read what condition you are being asked to return the premises to. If the lease is silent on make good there is no general obligation, and you fall back to the repair and yield up covenant subject to fair wear and tear. Most centre leases are not silent.
Second, and this costs almost nothing: get a photographic dilapidation and condition report of the tenancy as it was handed to you, dated, before a single thing is installed. Make good is nearly always defined against the condition at commencement. Without a record of that condition the argument is unwinnable, and landlords know it.
Part 9 of this series covers make good, reinstatement, removal of tenant's fixtures and the damages position properly.
Where people get burnt
The pattern is always the same. The tenant signs, the design approval process asks for more than the fit-out statement covered, the tenant treats it as a technical requirement rather than a commercial one, and pays. Nobody ever goes back and checks what was actually disclosed.
The whole protection package in this post depends on one habit: keeping the disclosure statement and the tenancy fit-out statement, dated, and reading them again the first time the centre asks for something new.
One thing to check before you rely on any of this
The Retail Leases Act is under review. The Retail Leases Amendment (Review) Bill 2025 (NSW) was before Parliament and proposed a number of changes, including moving the prescribed disclosure statement forms out of the Act and into regulations, and allowing legally represented parties to reduce or waive the seven day disclosure period by written agreement.
That last one matters. If it commences, an agreement between solicitors can shorten the seven day window, and the protection you were counting on may not be there. Ask your solicitor what the current position is at the time you sign rather than relying on any article, this one included.
Ask your solicitor about these, by section
Section 9, retail tenancy guide and copy of lease at negotiation stage
Section 11, disclosure statement, seven day rule, six month termination right
Section 12, undisclosed liability for finishes, fixtures, fittings, equipment and services is void
Section 12A, undisclosed outgoings
Section 13, written cap on landlord works you are back charged for
Section 13A, tenancy fit-out statement and the limit on your fitout liability
Section 21, special rent for a landlord funded fitout
Section 35, demolition clause, notice period and fitout compensation
Whether the Act applies at all, given the 1,000 square metre threshold
Next in this series, part 2: what a Sydney centre fitout actually costs, broken down by category, with the line items tenants consistently leave out.
At Behe Constructions we read fit-out statements and demarcation schedules alongside the tenant's solicitor before a lease is signed, because the construction detail and the legal detail are the same conversation. If you have an offer in front of you, we are happy to look at it.
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