Retail Lease Minimum Term WA
In Western Australia, a retail shop lease of more than 6 months but less than 5 years gives the tenant a statutory option to renew, so the total term can reach five years. The tenant chooses whether to use it. We advise tenants and landlords on how the rule applies.
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The five-year rule
The rule comes from section 13 of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA). There is no minimum term as such. Instead, if a retail shop lease runs for more than 6 months but less than 5 years, counting any options, the Act gives the tenant an option to renew. The renewal can run until a date the tenant chooses, no later than five years after the lease began.
So a three-year term with a two-year option already reaches five years. A two-year lease with no option gives the tenant a statutory option for up to three more years.
The option doesn’t arise if the tenant has already occupied the premises for five years or more in total, or if a renewal would be inconsistent with a head lease.
Using the option
The tenant isn’t bound to a five-year term. It has an option it may choose to use. To exercise it, the tenant gives the landlord written notice in the prescribed form (Form 3, Notice of Exercise of Option) at least 30 days before the lease ends. The tenant can’t exercise it while a default under the lease remains unremedied.
Can the option be excluded?
Not by agreement. Section 15 of the Act makes any term that excludes or limits the Act void, and there is no lawyer’s certificate route in WA.
The only way is an order of the State Administrative Tribunal. The tenant, or prospective tenant, applies in writing. The Tribunal can order that the option doesn’t arise if it is satisfied the tenant applied of its own free will and the circumstances justify the order.
For tenants
A shorter term can suit you, for example if you are testing a new location. The statutory option means you can usually stay on for up to five years if the business works, but you need to give notice on time.
We review the lease, explain how the option applies to your lease, and tell you when and how to give notice.
For landlords
If you offer a term of less than five years, assume the tenant may stay for up to five years. A clause saying otherwise won’t work. If the landlord and tenant both want a short term that can’t be extended, the tenant must apply to the State Administrative Tribunal for an order, and the application must be the tenant’s own choice.
You must also give the tenant a disclosure statement and a copy of the proposed lease at least 7 days before the lease is entered into. When we draft your retail lease, we prepare the disclosure statement with it.
The SBDC
The Small Business Development Corporation (SBDC) gives information on retail leases in Western Australia and offers dispute resolution for landlords and tenants. Disputes that aren’t resolved can go to the State Administrative Tribunal.
Questions
Something else? Enquire online or email us.
Can a tenant sign away the option with a lawyer's certificate?
No. WA has no certificate or legal-advice route. A term that tries to exclude the Act is void. The only way to remove the option is an order of the State Administrative Tribunal on the tenant's own application.
Offered a short retail lease?
Send us the lease or the terms you've been offered and we'll tell you how the option applies.
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