If you are a landlord of a commercial premise and you have granted a retail shop lease which is governed by the Retail and Commercial Leases Act 1995 (SA) (Act), there are strict requirements around the protocols at the end of a lease term that you are required to follow, which if you do not consider could give rise to unforeseen and negative outcomes. 

Requirements

Pursuant to Section 20J of the Act, provided the lease: 

  • is not for a shop within a retail shopping centre (as defined in the Act); and 
  • does not contain an option for the tenant to renew or extend, 

a landlord must at least 6 months and no more than 12 months prior to the end of a lease term, give written notice to the tenant that either: 

  • offers the tenant a renewal or extension of the lease on terms and conditions specified in the notice; or 
  • informs the tenant that the landlord does not propose to offer a renewal or extension of the lease and that the lease will come to an end. 

A notice that informs the tenant that the landlord does not wish to extend the lease may also include other information about the landlord’s intentions, such as that the landlord will allow the tenant to remain in the premises as a periodic tenant (for example, if the lease allows for holding over).  

A notice by a landlord under this section is uncapable of being revoked for a period of one month from the date it is given.  

Potential Consequences

Importantly, if the landlord fails to give notice pursuant to Section 20J of the Act and the tenant gives a notice in writing requesting an extension of the current lease, the term of the lease is automatically extended until the date six months after the landlord gives the required notice to the tenant. 

This may have negative consequences for the landlord as it will extend the timeframe required to procure vacant possession of the premises and could result in the tenant having the right to occupy the premises for much longer than the landlord had intended. 

Summary

Landlords and commercial agents should take particular care to ensure correct notice is being provided to all tenants when the lease is due to expire and the landlord wishes to obtain vacant possession. 

Assistance

If you are a landlord and need advice about the terms of your commercial lease, or any other commercial leasing matter, we have extensive experience in acting for landlords. 

Please reach out to us on 8366 7900 and our expert leasing team will be in touch. Alternatively, email us at engage@eckermanns.com.au