Entering into or renewing commercial leases for retail shops in South Australia means that apart from any other agreement documents, you will get a disclosure statement.
There are some exceptions for needing disclosure statements, but for most retailers this document will contain crucial information and that could mean the difference between building a successful operation or ending up having to wind up your business due to crippling overheads or having nowhere to operate.
Strap yourself in because this can be a complex area of regulations to understand.
But then again, this is exactly the situation your trusted conveyancer, lawyer and other advisors are there to help you with.
What disclosure statements for retail shops should contain
In South Australia, the disclosure statement should cover items including amongst other details:
- the lettable area of the shop in square metres
- whether or not the lease can be renewed and conditions attached to renewal
- access rights to the premises
- financial obligations including rent, maintenance, shared costs and other outgoings
- consequences of a breach of the lease
Of course, the term of the lease, right of renewal and the basis for rent reviews will be central to your considerations when embarking on your retail enterprise (or renewing it).
This applies whether you are entering into a new lease or renewing a current one; assume nothing and read everything.
I cannot stress enough how important it is to go through the details of the disclosure statement as well as the lease.
The Retail and Commercial Leases Act 1995 allows some exceptions to the need for a disclosure statement from your landlord (or lessor).
Firstly, if your lease is not a retail shop lease, then there is no need to give a disclosure statement.
However, a disclosure statement is also not required for some retail shop leases where:
- The rent is more than $400,000 per year
- The lease is for one month or less
- Your right to occupation is due to a purchase, a mortgage or being part of a company that controls the premises in question
- Landlords have no obligation to provide disclosure statements when leasing to a public company or its subsidiary, to banks, building societies or credit unions, or a body corporate authorised to carry on the business of insurance
- A further exception applies to the Crown (state, territory or commonwealth), municipal or district councils, or other authorities with the powers and functions of local government
There are still many other facets and details captured under this Act but hopefully this article has helped you gain more insight into some of the major points.
As always, the Eckermann Conveyancers team is always on hand to help forge clarity out of complexity.