New South Wales Consolidated Acts

RETAIL LEASES ACT 1994 - SECT 40

40 Key-money on assignment prohibited

(1) A person must not, as lessor or on behalf of the lessor, seek or accept the payment of key-money in connection with the granting of consent to the assignment of a retail shop lease and any provision of a retail shop lease is void to the extent that it requires or has the effect of requiring the payment of key-money in connection with the granting of consent to the assignment of the lease.

(2) If a person contravenes this section:

(a) the person is guilty of an offence and liable to a penalty not exceeding 100 penalty units, and

(b) (whether or not the person is convicted of an offence under paragraph (a)) the lessee is entitled to recover from the lessor as a debt any payment made or the value of any benefit conferred by the lessee and accepted by or on behalf of the lessor in contravention of this section.

(3) This section does not preclude any right of the lessor to require payment of a reasonable sum in respect of any legal or other expenses incurred in connection with such a consent. The lessee is entitled to have those expenses substantiated by the lessor before making such a payment.

(4) This section does not prevent a lessor from securing performance of the assignee’s obligations under the assigned lease by requiring the provision of a security bond or other bond or a guarantee from the assignee or any other person.

Note: This section and section 39 do not prevent the lessor and a proposed assignee entering into a new lease of the retail shop as an alternative to an assignment of the existing lease.