There are a number of reasons why a landlord may wish to relocate their tenants and likewise a great number of reasons why a tenant may wish not to be relocated. Forced relocation can be disruptive to a business, costly and stressful for the tenant. If you operate a retail shop which the Retail Shop Leases Act (Qld) applies, it is important for you to know your rights.
Validity of a Relocation Clause
For a landlord to be able to force a tenant to relocate their business during any fixed period, the lease must contain a relocation clause which must meet certain requirements. Such a clause must provide that:
- the landlord proposes to refurbish, redevelop or extend (Proposed Works), the building in which the leased shop is situated during the term of the lease or any renewal of it
- where the works can not be carried out practicably without vacant possession of the leased shop, then the landlord may take action requiring the lessee to relocate the lessee’s business (Relocation Action)
Where the terms of the lease meet these minimum requirements and the landlord wishes to take a Relocation Action, the landlord must then provide written notice (Relocation Notice).
Where the relocation clause meets the requirements above, the landlord may take action towards a forced relocation, but in doing so, is bound to meet certain notice requirements. Where these notice requirements are not met, the tenant is entitled to dispute the Relocation Action with the tribunal and if successful, the landlord will not be permitted to take Relocation Action.
Requirements of the Relocation Notice
The Relocation Notice must be provided in writing to the tenant 3 months prior to date of the proposed relocation. Additionally, the written notice must also provide sufficient details so that the affected tenant is able to assess whether the Proposed Works:
- are a ‘genuine proposal’
- will be carried out within a reasonably practicable time after the tenant is relocated
- cannot be carried out without vacant possession
Further, the written notice will allow the tenant to establish:
- details of the ‘reasonably comparable’ alternative premises to be provided by the landlord
- the date by which the tenant must vacate
What is a ‘reasonably comparable’ alternative premises?
The Relocation Notice must provide the tenant with sufficient detail about the alternative premises so that the tenant is able to form a view whether the proposed premises are ‘reasonably comparable’ to the existing premises.
The Tribunal usually considers details like size, location and any adjusted rent. Additionally, the Tribunal may also consider exposure to traffic, the commercial value, or general appearance of the alternative premises to determine whether they are ‘reasonably comparable’.
There is a widely accepted minimum amount of information that should be included in a Relocation Notice. For more information, please contact the writer.
What are your rights if you receive a Relocation Notice?
Upon receipt of the Relocation Notice, a tenant has 1 month to decide whether to terminate the existing lease or to accept relocation to the proposed premises. Importantly, where the tenant does not give notice to terminate the lease, the tenant will be deemed to have accepted the landlord’s proposed retail premises.
What if you accept the proposed premises?
Where a tenant wishes to continue with the lease and move to the proposed alternate premises, tenants are entitled to payment from the landlord for reasonable relocation costs such as:
- dismantling and reinstating any fixtures and fittings;
- modifying or replacing fixtures and fittings to their original standards prior to relocation; and
- any reasonable legal costs incurred.
If the tenant and landlord dispute the reasonable relocation costs, the tenant is entitled to participate in the Alternative Dispute Resolution process with the landlord.
If you find you or your business is subject to a relocation clause and you wish to confirm your rights, we recommend that you get in touch with us to ensure you are protected. We understand relocation of business can be expensive, time consuming and stressful. Our experienced team of property lawyers are ready to help.
For more information, please contact Gavin McInnes | email@example.com | 3009 8444.