Landlord and Tenant – more Tenant tips for a business premises Lease (Part 2)

These tips are relevant for a Retail Shop Lease and a Commercial Lease. Our lawyers (solicitors) advise on on Retail Shop Leases and Commercial Leases Queensland wide.

Bond / Bank Guarantee / Security Deposit

Usual commercial practice sees landlords requiring a bond / security deposit from the tenant of 1 – 6 months rent.

The bond is usually provided by way of a Bank Guarantee. A Bank Guarantee is issued by the tenant’s bank in favour of the landlord and is an unconditional order to pay when it is presented by the landlord to the bank. The tenant gets no say about whether the bank pays out on it or not. Your bank will charge a fee to issue the bank guarantee, an annual fee to maintain it and will usually require some security.

Personal Guarantees

A landlord will usually ask for and insist on personal guarantees from the directors and possibly shareholders of the tenant company. Take care before agreeing to these as liability under them can arise years later when you thought the lease was all done and dusted. Consider offering a larger band rather than giving personal guarantees.

Lease legal advice

Need help? Our Property Law and Leasing team (of lawyers / solicitors) now offers a fixed fee High Point Lease Review and advice conference (in person or by phone) for leasing Queensland wide. This can be done same day if needed. Contact us now for a fixed fee quote.

7 Replies to “Landlord and Tenant – more Tenant tips for a business premises Lease (Part 2)”

  1. We are 2 years in to a 3 year lease and our retail shop has taken a big dive financially,struggling to make ends meet. We have contacted agent and discussed this matter with them. We are now 3 weeks behind in rent and starting to get phonecalls every second day demanding we pay rent immediately. Last call they made to me was if we dont pay this week they will commence legal action, we feel very threatened by this. Where do we stand?

  2. I suggest that you keep a telephone of face to face conference with a leasing lawyer who can look at your Lease and advise you about where you stand. If the premises are in Queensland we can help. Please let us know if you would like a quote for that conference.

  3. Our company had a lease on 5 + 5 + 5 years basis in Year 2000. Personal Guarantee was in place. The option of lease expired in 2010. We are two directors in company. One director resumed the business in name of company without renewing the lease. In Feb 2012 he closed the business with an outstanding rent and costs of app. 25000. The landlord is asking for 50% of outstanding rent from me but I explained that this business was run on a month to month basis by other director without signing any documents. Is Personal guarantee enforceable is lease option is not renewed.

  4. Hi Kanwal
    The documents are going to need to be looked at by a lawyer for you.
    Issues for advice:
    – Was the corporate tenant “holding over” from month to month under the existing Lease or was it a new month to month Lease?
    – The answer to the first question may have a bearing on whether the guarantee responds or the terms of the guarantee may be broad enough to rope you in anyway.
    – The terms of the guarantee will require review as well.
    – What are your rights against the other director?
    With us for Queensland Leases you would need 90 minutes of lawyer time for document review and an initial conference in person or by telephone to provide preliminary advice on these issues. Please let us know if you would like a quote for this.

  5. Hi,
    I am looking at leasing a commercial property for the first time and the landlord is asking for 2 mths rent and personal guarantee. We are a new company with little history. I am investing over $100k in renovations on the property all of which I will leave & also happy to increase bank guarantee to 4mths rent. Another option is offering a years worth of collateral for 18mths to make the landlord more comfortable. Is this fair? The rent is 29k per annum. The landlord is a commercial lawyer. Should I be worried. I feel I have gone above and beyond here. Thanks

  6. can you advise if a landlord has the right to withhold receipts and then state he is evicting you as you have not paid rent, when you are able to produce a ledger of rent all up todate. Landlord put up a handwritten eviction notice, and when challenge is now prepared to drop the law suit but insists that 6months worth of rent be paid. Also we where hit with a notice of remedy from the lawyer stating that a water bill due on the 3rd of February had to be paid now, as the landlord reckon it would not get paid.and also a notice of remedy that the rent was overdue yet is was actually walked into his bank and deposited and he stated he had not received it, and therefore was doing the eviction on these two remedy.The landlord also enters the cafe any time without a entry permit, he also tells the customers that the cafe is closing and come to him he will do a deal, he also poaches staff, and also turns up 6.00am at the door of the unit . This landlord wants to start development in Bribie now instead of June which is when the lease expires and therefore trying to find all ways to get us out, when our bills are all paid, but yet we cant get receipts from him, and have not even had a copy of the water bill, which he is demanding now . He has never produce or posted a permit to enter, he just walks in, and demands, also he has been subotaging the gas lines etc and locks and then saying that oh you have not paid your bill, and when a plumber is called out, its to find that the level on his side as been snapped off? The other day the lock on the back gate was gone and he said it was an ohs issue and then omitted to removing the lock – where do we stand and do we have a case and if so, a quote . We do have a lawyer but he is not a leasing lawyer This is my sons business , and I am trying to find alternative options as I want him to fight him, as he is a big fish, and we have taken alot of his business from his cafe right next door . Thank you

  7. Thank you for your question.

    We can certainly provide advice on these matters. The observations below are not legal advice.

    Assuming the premises are in Qld, section 124 of the Property Law Act 1974 (Qld) for example provides in part as follows:

    124 Restriction on and relief against forfeiture

    (1) A right of re-entry or forfeiture under any proviso or stipulation in a lease, for a breach of any covenant, obligation, condition or agreement (express or implied) in the lease, shall not be enforceable by action or otherwise unless and until the lessor serves on the lessee a notice— (a) specifying the particular breach complained of; and (b) if the breach is capable of remedy, requiring the lessee to remedy the breach; and (c) in case the lessor claims compensation in money for the breach, requiring the lessee to pay the same; and the lessee fails within a reasonable time after service of the notice to remedy the breach, if it is capable of remedy, and, where compensation in money is required, to pay reasonable compensation to the satisfaction of the lessor for the breach.

    Remedies under the terms of the Lease and Retail Shop Leases Act 1994 (Qld) should also be considered including a possible application to QCAT of a retail shop lease dispute.

    I suggest an initial appointment with one of our Lease Dispute lawyers. Please contact our Brisbane office for more details.

    Andrew Lind

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