It is a contract between the owner of a premises (lessor) and the person who want to use the premises to run a business (lessee).

Negotiating a lease incorporating the terms and conditions of leasing the premises.

They can be either. Short-term leases offer flexibility but carry the risk that the business may not recover its investment.

Terms of a short-term lease are the same as the terms for a long-term lease. Long-term leases offer greater stability than short-term leases but lock in a business to pay rent when the business may not be able to trade.

Leases of more than 3 years require registration with the Queensland Titles Registry.

For the lease to qualify as a retail shop lease, the premises is used wholly or predominately for the carrying on of a retail business. A lease for a retail business must abide by the Retail Shop Leases Act. If any lease term or terms are inconsistent with this Act, the Act will prevail. The Act confers benefits and protections for the lessee, including restrictions on outgoings and rent reviews, and early determination of current market rent if there is an option to renew or extend the lease.

There are several key considerations for retail shop leases, including disclosure statements, money and ratchet clauses, and options and renewals. Disclosure Statements - A landlord must provide a tenant with a disclosure statement that details important terms such as an estimate of outgoings. The landlord must provide this, and a copy of the proposed lease, at least 7 days before the tenant enters the lease.

They must also provide to the tenant a certified copy of the signed lease within 30 days of it being signed. Money and ratchet clauses - A landlord cannot request “key money” from a tenant in return for the grant, assignment or renewal of a lease. Also, any security deposit collected from a tenant must be refundable. A ratchet clause is one which prevents a reduction in rent. Such a clause is also prohibited.

Options and renewals - An option to renew is different to a lease renewal. An option to renew is a specific clause in the lease which entitles the tenant to renew the lease. If there is no option, or all options have been exercised, a new lease must be sought. In this case, if the lease is for less than 1 year, the landlord must advise the tenant at least 3 months before lease expiry whether renewal is possible and on what terms. If the lease is for more than 1 year, the period extends to 6 months.