Minimum 5 year term
20B Minimum 5 year term
The term for which a retail shop lease is entered into must be at least five years.
The term of a retail shop lease is worked out under this section on the assumption that any right or option of renewal or extension under the lease or a collateral agreement will in fact be exercised.
However, a right or option of renewal or extension will not be taken into account if it is given after the lease is entered into.
A lease is not invalidated by contravention of this section but the term of the lease is extended to bring the term (or aggregate term) to five years.
Example—
If a lease is entered into for a term of three years, its term is extended by two years to five years. If a lease is entered into for a term of two years with an option for a further one year after that initial two years, the term of the lease is extended to four years (with the option for a further one year after that initial four years).
This section does not apply to a lease if—
the lease is a short-term lease (ie a lease entered into for a fixed term of 6 months or less); or
the lease arises when the lessee holds over after the termination of an earlier lease; or
the lease contains a certified exclusionary clause; or
the lessee has been in possession of the retail shop premises for at least 5 years; or
in the case of a retail shop lease that is a sublease—the term of the retail shop lease is as long as the term of the head lease allows;
or
the lease is of a class excluded by regulation from the ambit of this
Division.
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