A retail lease variance can be a trap for the unwary. If the variation is substantial enough, it can constitute a surrender (or termination) of the original lease and the re-grant of a new lease.
When will the variation be substantial enough to be a worry?
The courts have held that the following variation can constitute the re-grant of a lease:
- A change of the term of the retail lease;
- A change to the parties;
- A change to the premises (including increasing or decreasing the floor area);
- The addition of an option to renew;
- A change to the rent payable;
- A significant change to outgoings payable; and
- A significant change to the security provisions.
What is the consequence of the variation constituting a re-grant of a new retail lease?
The lessor is obliged to comply fully with the Retail Leases Act as though the varied lease did not exist. Most importantly in that regard, it triggers the disclosure obligations for new retail leases.
Contact a member of our Property Law Team for further discussion and advice.