Preparing the lease

Lady reading a piece of paper

Who pays for preparing a lease?

The Retail Leases Act 1994 (the Act) states that the landlord pays the full cost of preparing the lease, including the mortgagee consent fee.

If the landlord or agent asks the tenant to pay the legal costs, the tenant should write to them and refer to sections 3 and 14 of the Act.

However, if the tenant has asked for changes to the lease after giving the tenant’s disclosure statement to the landlord, the tenant may be required to pay for those changes.

If the tenant has to pay for these changes, the landlord or agent must provide copies of relevant accounts or receipts. The tenant doesn’t pay if the changes are variations to the rent or the term, changes due to the landlord’s failure to make previously agreed changes, or a change requested before the landlord receives the lessee’s disclosure statement.

The cost of registering a lease is generally paid by a tenant. Leases with a lease period of more than three years, including any option period, must be registered. This helps to protect the tenant’s interests.

The tenant pays their own legal costs.

Other lease payments

The landlord is also prohibited from asking for key money when entering into a retail lease.

However, the landlord or agent is entitled to receive payment of rent in advance, a security bond or some other bond or guarantee from the tenant.

When a tenant asks to transfer (assign) a lease, the landlord can expect to have their reasonable legal costs paid. These costs are not considered to be key money because the landlord is not benefiting and is incurring costs because of the tenant’s request to transfer the lease.

When a lease is being renewed or extended, the landlord pays the full costs of preparing the lease.