This SA Property Alert focuses on the introduction by the SA State Government of the Retail and Commercial Leases (Miscellaneous) Amendment Bill 2019 (Bill) into Parliament on 3 July 2019. The Bill will amend the Retail and Commercial Leases Act 1995 (SA) (Act).
The Bill proposes the following amendments of note to the Act:
- Act Application Fluidity (Rent) – Changes to the Act to make it clear that it will not apply to a retail shop lease where the annual rent payable exceeds the prescribed threshold (currently $400,000.00), regardless of whether the Act initially applied to the lease because of the amount of rent then payable. This provision will enshrine recent case law.
- Option to ‘Lock In’ Application – The insertion of an exception to the above mechanism, for a retail shop lease or renewal with an initial annual rent placing it outside of the Act. Provided that the lease or renewal is registered within three months of execution, the status of the instrument as outside of the Act will be permanent, regardless of any later increase in the prescribed threshold that would otherwise place it within the jurisdiction of the Act. This exception can only be applied to leases entered into after the date of the Bill passing into law (or renewals exercised pursuant to leases entered into after that date).
- Act Application Fluidity (Lessee) – Allowing a retail shop lease to move in or out of the Act where the lessee becomes, or ceases to be, a lessee of a type excluded from the application of the Act.
- Threshold Review – The provision of a formal process for the Valuer-General to review the prescribed threshold periodically.
- Return of Bank Guarantee – The insertion of a new section mandating the return of a bank guarantee given as security within two months of a lessee completing the performance of its obligations under a lease. The new section would make a lessor liable for any loss suffered by a lessee as a result of a failure to return a guarantee in compliance with the section.
- Security Bond – An increase in the maximum permitted security bond from four weeks’ to three months’ rent.
- GST – Clarifying that in determining whether annual rent exceeds the prescribed threshold, GST is not to be taken into account.
- Six Month Holdover – The removal of the ambiguity arising from section 20B of the Act such that a holdover of any length will not be construed as giving rise to a new (minimum five year) term.
- Domestic Public Companies – The insertion of definitions of ‘public company’ and ‘subsidiary’ by reference to section 9 of the Corporations Act 2001 (Cth).
- Foreign Public Companies – The exclusion (as at and from the date that the Bill comes into force) of leases where the lessee is a company listed on a foreign stock exchange from the application of the Act.
- Public Charity Companies – The inclusion (as at and from the date the Bill comes into force) of public charitable companies within the coverage of the Act.
- Disclosure Statement on Renewal – The removal of the obligation currently imposed on lessors to serve disclosure statements in the case of renewals.
- Commissioner’s Certificate – The insertion of a new section permitting the Small Business Commissioner to sign five year exclusionary clauses as an alternative to a solicitor.
The Bill is currently being debated by Parliament following its second reading by the Attorney-General and is subject to change. A detailed discussion of the proposed amendments and their implications can be accessed here.
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