Professional Documents
Culture Documents
6. Permitted Use
A clause specifying what a permitted use of the premises is under the lease
should be included. In this case the permitted use for the shop to be used as a
cafe. Other permitted uses could also be included.
7. Costs
The costs of the lease preparation and other charges (for example stamp duties
and lease registration fees) would constitute another necessary clause. Danny
can only hold Natalie liable for a maximum of half of the cost of lease
preparation fees.
8. Insurance
A clause outlining the Lessee's insurance obligations with regard to public
liability and plate glass would be required.
9. Variation
As there is an indicating that the Lessee may wish to vary the use of the shop a
clause should be provided that allows for this. This clause cannot include a cost
for the variation as this would constitute a premium under s15 of the Retail and
Commercial Leases Act 1995.
10.Reparation/Refurbishment
This clause would have to be detailed and specific as the Lessor has strict ideas
about the refurbishment that the Lessee must undertake to the shop. The lease
should also include a clause that specifies that the shop is not fit for purpose as
is.
Task 2 Tax
Variation of the lease could constitute a CGT event that could activate the
requirement that capital gains tax be paid if the change in ownership constitutes
a change in majority underlying ownership of the lease.
The granting of a lease according to the GST Act constitutes a taxable supply as
it is a supply of a grant of a right to property in the form of a lease (ss9-10 GST
Act) for consideration (ss9-15 GST Act, in this case, rent) in the carrying on
(ss195-1 GST Act, doing anything in the course of commencement or
termination) of an enterprise (s9-20 GST Act, in the form of a business) within
Australia (involving Australian property). As the lease of the property does not
constitute an export, sale of a going concern, a financial supply or supply of
residential rent or premises, no exemptions from GST apply and therefore GST
will be payable by Danny with regards to the preparation of the lease, he can of
course pass this on to Natalie, but only to the threshold of half the cost of
preparing the lease.
Natalie also states that the disclosure statement is all she wants to sign,
obviously, in addition to the disclosure statement she must sign the lease itself
which could potentially contain the illegal clauses mentioned above. Obviously
before signing anything Natalie should engage in the searches mentioned below
in order to determine certain key things about the lease, particularly with regards
to the identity of Danny and his company and their connection to the property.
Task 5 Searches
There are several important searches that should be undertaken before advising
Natalie. The most obvious of these is a Certificate of Title search to determine
and identify the property and the landlord and to ascertain whether authority
exists to grant the lease and other issues related to the ownership and division of
the property. This will also have evidence of easements and encumbrances and
an accurate representation of the dimensions of the shop. This will help to
identify the dimensions of the premises with a degree of certainty to make sure
that the correct portion of the premises is are the premises specified in the lease.
Another important search would be an ASIC search. This would help determine
whether Dannys company is registered and importantly, whether he has the
authority to lease the premises.
A council search is should determine what the zoning restrictions of the premises
are and whether the zoning is suitable for the operation a caf. She should also
look at the zoning restrictions if she wishes to refurbish the shop, and especially
if she wishes to change its use to a 24 hour establishment in the future to
determine whether this would be viable.
An internet search for Danny's company may provide information that would not
necessarily be available via other search options, this may provide access to
news articles and other information regarding Danny and his company's
activities and essentially act as a public review for Danny as a Lessor. Obviously
this search may also provide nothing of use, but it is free and easy and should
definitely be undertaken.
Natalie should also probably engage a tenant representative or leasing agent to
determine whether the lease is fair with respect to the current leasing
environment, whether it is similar to other leases of the same type.
Task 6 - Execution
In order to execute the lease the disclosure statement must be signed by the
Landlord and served on the tenant. The tenant should then sign a receipt of the
disclosure statement before signing the lease (they are not required to do this
but it is a good idea for the landlord to insist).
Danny should then provide the lease for the Tenant to sign.
The landlord should then sign the lease after reviewing the lease once more and
determining the requirements for signing (for example whether Dannys
PART B
1Details of shop
Address: 31 The Parade, Norwood, SA.
Lettable area: 60 square metres.
The shop may only be used for: [Specify the permitted uses.]
2Term of lease
Term of lease: 5 years from 1 November.
[tick] The lease gives a right to renew or extend the term of the lease
as follows:
For an additional 3 years
4Access to shop
Hours during which the lessee will have access to the shop outside trading
hours: Shop is accessible at any time outside trading hours.
Date on which the shop will be available for occupation: 1 November.
5Monetary obligations
The lessee's obligations to pay rent, to pay or reimburse outgoings, to make
or reimburse capital expenditure and any other monetary obligations
imposed on the lessee are set out in Appendix A. (This would include
purchasing the fridge for $500)
7Consequences of breach
The legal consequences of early termination of the lease by the lessee as set
out in [insert clause numbers or other identification of relevant components
of lease] of the lease are as follows:
If rent is not paid, a lockout from the premises. If rent is not paid following a
lock out distraining of the Lessee's possessions
The legal consequences of other breaches as set out in [insert clause
numbers or other identification of relevant components of lease] of the lease
are as follows:
[Insert brief description.]
8Warnings
Oral representations made by the lessor or the lessor's agent on which the
lessee has relied should be reduced to writing and signed by or on behalf of
the lessor before the lessee enters into the lease.
The lessee should obtain independent legal and financial advice before
entering into the lease.
Date:
Signature of lessor:
Name:
Address:
Acknowledgment of receipt
I acknowledge receipt of this disclosure statement including:
[Tick 1 or more boxes as applicable.]
[tick] Appendix AMonetary obligations under lease
Date:
Signature:
Name:
Address:
3Other rent
Other rent payable for the shop is or is calculated as follows:
[Insert amount or formula.]
Part 3Outgoings
5Categories and estimate of annual liability
The lessee will be liable to pay or reimburse outgoings as follows:
Category of outgoings
$4,023.50
electricity
$ Not Specified.
$ Not Specified.
$295
$ Not Specified.
insurance
pest control
uniforms
car parking
child minding
gardening
cleaning
audit fees
management costs
$5,700
$12,052.5
[Tick 1 box.]
6Margin of profit
[Tick 1 box.]
[tick] The amount the lessee is required to pay towards outgoings does
not include a margin of profit for the lessor.
The lessee will also be liable for the following kinds of monetary
obligations:
[Provide details of other kinds of monetary obligations and, if possible,
an estimate of the annual cost of complying with those obligations.]
It is proposed to make changes to the shopping centre as follows:
[Describe the nature of the changes including any changes to the
buildings, parking and surrounding roads and, if a development
application is to be lodged, details of when and with whom it is to be
lodged. Attach details (in attachment marked "Proposed changes to
shopping centre") or include details of where to obtain further
information.]
8Introduction of competitor
[Tick 1 box.]
The lessee is assured that the current tenant mix will not be
altered to the lessee's disadvantage by the introduction of a
competitor.
9Tenant association
[Tick 1 box.]
The following is an estimate of the annual contributions that are
or may be required towards the costs of advertising and promoting the
shopping centre:
[Insert estimate.]