In South Australia, retail shop leases are governed by the Retail and Commercial Leases Act 1995
Although there are some exceptions, a retail shop lease is a lease of premises, situated in a retail shopping centre, at which goods are sold or services are provided to the public.
Key features of the Act include
- Leases must be for a minimum of five (5) years, including any options to renew. A lease can be for a head term of five (5) years, or any combination that totals five (5) years. For example a lease with a head term of one (1) year, with two rights of renewal for two (2) years each would be in accord with the Act, as the total term is five (5) years. A lease with a head term of two (2) years and one right of renewal for a term of two years would be contrary to the Act, as the total term is only four (4) years.
- A lessor (landlord) must provide a copy of a proposed lease to any prospective lessee (tenant), when negotiations begin. The lessor must also provide a disclosure statement before a lease is entered into or renewed. The Act and regulations specify what has to be in the disclosure statement. One month before each accounting period (usually the end of the financial or calender year) the lessor must provide the lessee an estimate of outgoings. This is done in the form of a disclosure statement.
- Within three (3) months after the end of each accounting period during the term of the lease (usually the end of the financial or calendar year), the lessor must provide to the lessee a written report, prepared by a registered company auditor, containing a statement of all expenditure for outgoings for that accounting period to which the lessee is required to contribute. If there are no outgoings other than Local government rates and charges, water and sewerage rates and charges, and insurance, the report does not have to be prepared by an auditor, but must be accompanied by copies of receipts for all such expenditure.
- Lessees in a shopping centre have a preferential right of renewal when their lease expires. The legislation sets out the rules that govern the granting of the preferential right.
- When a lease is assigned (transferred), the continuing liability of a lessee who assigns a lease is limited to a maximum period of two (2) years.
- The Act gives parties to a retail or commercial lease access to mediation to resolve their dispute.
For more information download the recently launched Retail and Commercial Leasing Guide.