The Retail and Commercial Leases Act 1995 (SA) (effective 1 October 1995) places substantial disclosure obligations on commercial landlords. These requirements are designed to ensure that prospective tenants—often small business owners—receive clear, transparent financial information before committing to a long-term lease.

1. The Mandatory Disclosure Statement

Before a retail shop lease is executed, the landlord must provide the prospective tenant with a disclosure statement in the prescribed form. This statement must be provided at least 7 days before the retail shop lease is entered into (Section 12(1)).

The disclosure statement must include comprehensive details such as:

• The proposed rent and how it will be reviewed during the lease term.
• A breakdown of all outgoings the tenant will be required to pay (e.g., council rates, strata levies, insurance). Note that under Section 30 of the Act, any provision requiring a tenant to pay or reimburse land tax is void.
• Details of any fit-out or "make good" requirements.
• Details about the building's structural condition (if known).
• Any current or pending legal proceedings affecting the premises.
• Whether the tenant will be required to join a marketing fund or merchants' association (in a shopping centre context).
• Demolition or renovation plans the landlord is aware of.

Consequences of Failure to Disclose

If the landlord fails to provide the disclosure statement as required, or if the statement contains significantly false or misleading information, the tenant may be entitled to:

• Terminate the lease by written notice to the landlord at any time within 6 months after the lease was entered into (Section 12(2)).
• Claim compensation for any loss suffered due to the landlord's failure to disclose.

2. The SA Retail and Commercial Leasing Guide

As soon as negotiations are entered into, the landlord must provide the prospective tenant with a copy of the proposed lease and the Retail and Commercial Leasing Guide published by the Small Business Commissioner (Section 11).

This guide is a plain-language explanation of the rights and responsibilities of both parties under the Act, covering topics like rent reviews, outgoings, maintenance, and dispute resolution. The purpose is to ensure the tenant fully understands the legal framework before signing.

3. Renewal and Extension Disclosures

For retail shop leases, especially those in shopping centres:

• If the tenant has a preferential right of renewal, the landlord must begin renewal negotiations between 6 and 12 months before the lease expires (Section 20C).
• If a retail lease does not have a right of renewal, the landlord must provide written notice of their intentions between 6 and 12 months before the lease expiry (Section 20B).

These long-lead-time disclosure obligations are designed to give tenants sufficient time to plan for the future of their business, whether that means negotiating a new lease, finding alternative premises, or winding down operations.

4. Outgoings Estimates and Audited Accounts

Each year, the landlord must provide the tenant with:

• A written estimate of outgoings at least 1 month before the beginning of each accounting period (Section 33(1)).
• An audited statement of actual outgoings within 3 months after the end of each accounting period (Section 34), allowing the tenant to verify whether they were charged correctly and to receive a refund if they overpaid.

Best Practices for SA Commercial Landlords

1. Use the Prescribed Forms: The Small Business Commissioner provides standard disclosure statement templates. Using these ensures you don't accidentally omit required information.
2. Provide Documents Early: Don't wait until the last minute. Provide the disclosure statement at least 7 days before the lease is entered into and the Leasing Guide as soon as negotiations begin.
3. Keep Records of Delivery: Obtain a signed acknowledgment from the tenant confirming they received the disclosure statement and the Leasing Guide. This is your evidence of compliance.

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