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Lease Agreements for Retail Premises, Code of Conduct for Fair Tenancy Leasing of Retail Premises & Fair Tenancy Industry Committee

There is a new Code of Conduct with leasing guidelines and negotiation principles for landlord and tenant of qualifying retail premises with effect from 1 June 2021. The Fair Tenancy Pro Tem Committee was formed in June 2020 to address tenancy issues faced by retail, F&B and lifestyle sectors in Singapore. It released its Code of Conduct on 26 March 2021.  The Code applies to all commercial lease agreements entered into on or after 1 June 2021.

On 3 May 2021, the Fair Tenancy Industry Committee (FTIC) was formed to be the custodian of this Code of Conduct and ensure that it provides guidance to landlords and tenants of qualifying retail premises so that fair and balanced lease negotiations can be achieved.

These Mandatory guidelines is to have fair & balanced position in lease negotiations and it provide a governance framework to ensure compliance by Landlord and Tenant with an accessible dispute resolution framework.

The Code of Conduct apply to retail premises that are located e.g. in office buildings, industrial & business parks, mixed-use developments, shop houses & shop flats, hotels, community centres, recreation & social clubs, museums, schools, hospitals, petrol kiosks, MRT stations, bus interchanges and airports.

There will be sharing of the Harvard Negotiation Project in Negotiation Strategies. There will be also be educational DVD video playing on mediation to resolve disagreements.

Outline

1. Code of Conduct

• Fair Tenancy Industry Committee
• Application to Code
• Meaning of Qualifying Retail Premises
• Conduct & Spirit of Negotiations
• Leasing Principles for Key Tenancy Terms
• Data Transparency
• Dispute Resolution & Enforcement of Code

2. Negotiations Conduct

• Good faith
• Negotiating in Bad faith
• Own commercial self-interest
• Reasonable commercial standards

3. Leasing Principles for Key Tenancy Terms

• “Should” = best practices
• “Must” or “shall” = mandatory requirements
• Checklist in Appendix 1 of Part D Code
• Exclusivity clauses
• Principles on Costs to Prepare Tenancy Agreement & Third Party Cost
• Fees for Tenant-Initiated Requests
• Point-of-Sales system
• Sales Audit Fees
• Public Liability Insurance
• Electricity Charges
• Advertising & Promotion Charge & Service Charge
• Pre-termination by L due to L’s Redevelopment Works
• Calculations
• Sales Performance
• Material Adverse Change
• Pre-termination by Tenant
• Security Deposit
• Floor Area Alterations
• Building Maintenance
• Rental Structure

4. Data Transparency

• Collecting sales data from Tenant as part of GTO Rent structure
• Confidentiality clause

5. Dispute Resolution & Enforcement of Code of Conduct

• Checklist in Part D Code
• Non-Compliance during Lease Negotiations
• Non-Compliance after signing of Lease Agreement
• Process for Dispute Resolution & Enforcement of Code of Conduct
• Pre-contract phase (non-compliant practices)
• Post-contract phase (within 14 days of TA signing)

Particular of Catherine Tay

Catherine Tay has over 35 years of lecturing experience as an Associate Professor lecturing business law at the National University of Singapore (NUS) Department of Strategy and Policy, NUS Business School. She is an Advocate and Solicitor of the Supreme Court of Singapore. She is also a barrister-at-law (of Lincoln’s Inn, United Kingdom). She is an author of more than 8 law books, including her best-seller book title called "Contract Law - A layman Guide".

She studied law at Queen Mary College, University of London and graduated with a Bachelor of Laws with Honours and with a Master of Laws, in which she specialised in Company, Shipping, Insurance and Marine Insurance Laws.

She has facilitated seminars and in-house training courses for many business law topics such as tenancy agreements, contract administration management, procurement contracts, legal and practical aspects of tender management, Service Level Agreements and Outsourcing contracts, oil and gas contract management, insurance contracts, Intellectual Property Laws and PDPA data privacy laws. She is an examiner on law subjects for a number of professional bodies and universities in Singapore and overseas. She has lectured at the NUS Extension in professional and business management law courses.

She was an adjunct lecturer at NUS Institute of System Science, in IT outsourcing contracts for over 20 years. She is the Honourable Legal Advisor for the Singapore Optometric Association, as well as for the Singapore Institute of Engineering Technologists.