What is a relocation notice?
Many retail leases include a relocation clause. This allows the landlord to require you to move your shop to another location so that building work can be carried out. You should check your lease to see if it includes this clause.
The landlord can’t relocate your shop unless you are given three months written notice of relocation and details of an alternative location for your shop. This is the 'relocation notice'.
The landlord can’t force you to relocate without giving you information about the planned work at the building or shopping centre that shows the plan is genuine and will be carried out soon after your relocation. The landlord must also show that the work can’t be done without vacant possession of your shop.
Under the Retail Leases Act 1994, the tenant whose business is relocated has some minimum legal entitlements. However, the tenant and landlord may negotiate a new five-year lease to cover the relocation if they want to.
You are entitled to a new lease on the alternative shop on the same terms and conditions as your existing lease. However, the term of the new lease will be for the time remaining on your existing lease.
The rent for the new shop should be the same as for the existing shop, but adjusted to take into account any commercial differences between the two shops, such as the new shop being in a more favourable position in the shopping centre.
You and the landlord may also negotiate other arrangements about the relocation.
Ending the lease
The tenant can end the lease within one month of receiving the written relocation notice from the landlord.
To terminate the lease, you must tell the landlord in writing, giving three months’ notice, unless you and the landlord agree to some other timeframe.
If you want to terminate the lease but don’t follow this process, the landlord can assume that you have accepted the offer of the new lease. You and the landlord may also negotiate a different arrangement.
Costs of relocation
The landlord must pay reasonable costs involved in the tenant’s relocation.
These costs may include:
- dismantling fittings, equipment and services
- changes (fittings, finishes, equipment etc) to the new shop to bring it up to the same standard as the previous shop, and
- legal costs.
If you and the landlord can’t agree about your costs, the amount may be decided by a quantity surveyor.
If you can’t agree on a quantity surveyor to do the work, the president of the Australian Institute of Quantity Surveyors will appoint one for you.