Commercial Leasing Services

If you’re looking to lease a space for your business, you might be wondering how short of a lease you can agree to, especially if you need flexibility.

In South Australia, the Retail and Commercial Leases Act 1995 applies to many retail and commercial premises, subject to eligibility requirements and exclusions. The prescribed annual rent threshold is $420,000 (excluding GST).

Where the Act applies, a lease generally must provide a minimum five-year term, including any options to renew.

However, there are circumstances in which a shorter lease may be possible, including:

• Short fixed-term leases: A fixed-term lease of six months or less may be exempt from the minimum five-year requirement.
• Certified Exclusionary Clause: A shorter term may be agreed to where the required certification is obtained from an independent solicitor or the South Australian Small Business Commission.
• Existing occupation: The minimum-term requirement may not apply where the tenant has already occupied the premises for at least five years.

The appropriate lease term will depend on your circumstances and whether the legislation applies to the premises.

When leasing a commercial property, having the right documents in place is essential to ensure clarity, legal protection and compliance with applicable South Australian leasing laws.

Where the Retail and Commercial Leases Act 1995 applies, the main documents you should expect to receive and review include:

• Draft or Sample Lease – The landlord (lessor) must provide a draft or sample lease as soon as negotiations begin. This document outlines the key terms and conditions under which the premises will be leased.
• Disclosure Statement – This document provides essential lease details, including rent, rent reviews, lease term, renewal options, outgoings, permitted use and other relevant obligations. It helps prospective tenants understand their financial and legal commitments before entering the lease.
• Retail and Commercial Leasing Guide – The landlord must provide the current guide with the draft or sample lease. It explains important rights and obligations under the legislation.

In some cases, a landlord may ask you to sign an Offer to Lease or an Agreement to Lease before the formal lease is prepared.

Although these documents may appear to be preliminary agreements, they can create legally binding obligations to enter into a formal lease later.

Seeking legal advice before signing any pre-lease documentation can help you understand your obligations and avoid unintended commitments.

Registration of a commercial lease is not generally compulsory in South Australia, but it can provide important protection for a tenant’s leasehold interest.

Registering a lease may be particularly beneficial if:

• Your lease exceeds one year. Registration can help protect your interest against subsequent purchasers and other registered interests.
• The property may be sold. A registered lease generally provides stronger protection of your leasehold interest if ownership changes.
• Your lease includes renewal options. Registration may provide additional protection for your rights under a longer-term leasing arrangement.

Whether registration is appropriate will depend on the lease terms, the nature of the property and any existing interests registered against its title.

It is advisable to obtain legal advice about registration and the protection available to you before signing.

Before signing a commercial lease, it is important to understand who is responsible for repairs and maintenance, as unclear terms can lead to unexpected costs and disputes later.

Responsibilities depend on the lease agreement and any applicable legal requirements.

Tenant Responsibilities

Depending on the lease terms, tenants may be responsible for:

• Routine cleaning, maintenance and general upkeep.
• Replacing consumables and maintaining certain fixtures or equipment.
• Repairing damage caused by the tenant, their staff or customers, where required under the lease.
• Reporting repair or maintenance issues to the landlord promptly.

Landlord Responsibilities

Depending on the agreement and applicable law, landlords may be responsible for:

• Structural repairs involving the foundations, walls or roof.
• Certain repairs or maintenance relating to essential building services.
• Maintenance of common areas in multi-tenanted buildings.
• Addressing specified defects or pre-existing issues in accordance with their obligations.

Why the Lease Terms Matter

The division of responsibilities is not always straightforward. A commercial lease may allocate additional maintenance or repair obligations to the tenant, including responsibilities relating to air conditioning, plumbing or other building services.

• Do not assume the landlord is responsible for a particular repair unless the lease or applicable law supports that obligation.
• Review any clauses relating to maintenance, repairs, replacement and make good obligations.
• Carefully review the Disclosure Statement, where required, to understand the costs and obligations associated with the lease.

Since repair responsibilities vary between leases, understanding your obligations before signing can help prevent unexpected liabilities.

If you are unsure about your lease terms or need assistance negotiating repair and maintenance responsibilities, our commercial leasing lawyers can help you understand your position and protect your interests.