Form 11 vs Form 12

Form 11 and Form 12 are the two advice reports a lessee gives the lessor before entering a retail shop lease in Queensland. Form 11 is the financial advice report, signed by a qualified accountant. Form 12 is the legal advice report, signed by a lawyer. Unless an exception applies, the Act requires both, before a lease or an assignment of a lease is entered into (section 22D).

Form 11 and Form 12 side by side

Both are approved forms under the Act, published on the Queensland Government and Queensland Small Business Commissioner (QSBC) websites. Neither form contains the advice itself. Each records that the advice was given, with a statement by the lessee that they received and understood it.

Why there are two reports

The Act wants a lessee to understand two separate things before committing to a retail shop lease.

The first is the money. A retail lease often runs for several years, with rent increases, outgoings and a fitout to pay for. The financial advice is about whether the business can carry those costs.

The second is the legal terms. A lease can put risks on the lessee that aren’t obvious on a first read, such as make good obligations, a personal guarantee or restrictions on selling the business. The legal advice is about what you’re agreeing to and what your rights are under the Act.

One adviser rarely covers both, which is why the forms are separate.

Do you need both?

Yes. Section 22D requires both reports before a retail shop lease is entered into, and before an assignment, where the incoming lessee gives them. There is no option to waive them.

The exceptions are:

• a major lessee, meaning a lessee of 5 or more retail shops in Australia
• a franchisee occupying the shop under a licence from the franchisor, who holds the lease (a franchisee who signs the lease, takes a sublease or takes an assignment still needs both reports)
• a lease of 6 months or less, or a periodic tenancy

Section 22D doesn’t mention renewals under an option or extensions, so check what is needed before you assume either report can be skipped. See do I need a Form 12? for the main situations.

If the lease isn’t a retail shop lease at all, neither form applies.

Need the legal advice report? We advise you on the lease and sign your Form 12. Get a Form 12.

How the two reports fit into the signing process

A typical order looks like this:

1. The lessor gives you the disclosure statement and the proposed lease.
2. You send both documents to your lawyer and your accountant.
3. Your lawyer advises you on the lease. If changes are needed, you raise them with the lessor.
4. Your accountant advises you on the costs, using the final rent and outgoings figures.
5. Each adviser signs their form.
6. You give the lessor the signed Form 11 and Form 12.
7. The lease is signed, at least 7 days after you received the disclosure statement.

The 7-day period is the minimum. Start the advice as soon as you have the documents. See the 7-day disclosure period in QLD for how it works.

Common problems

• Leaving it too late. If you ask for advice the day before signing, there may be no time to negotiate anything the advice turns up.
• Advice on the wrong version. If the lease or rent changes after the advice, the advice may need to be updated.
• Using the lessor’s adviser. Both reports should come from advisers acting for you. The lessor can’t make you use or pay for a lawyer it nominates.
• Old forms. The approved forms are updated from time to time. Use the current versions from the QSBC website.
• Missing the guarantor. If someone is giving a personal guarantee, they should understand what they’re signing too.

What each adviser needs from you

Give both advisers the same documents: the disclosure statement, the proposed lease, any heads of agreement or offer letter, and details of any incentives or fitout contribution. Your accountant will also want your business figures or forecasts.

The more complete the documents, the faster each adviser can sign off.