South Australia Commercial Security Deposit Laws
Learn about SA commercial security bonds (max 3 months' rent), bank guarantees, and lodgement with the Small Business Commissioner.
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South Australia Commercial Security Deposit Laws
Commercial Bond Process in south australia
Negotiate Bond
Agree on bond type and amount during commercial lease negotiations.
Receive Security
Accept bank guarantee or cash bond from the tenant before occupancy begins.
Hold During Lease
Keep the bond secure for the duration of the commercial tenancy.
Release or Claim on Expiry
Return bond if no outstanding claims, or call on it if the tenant has defaulted.
Under the Retail and Commercial Leases Act 1995, commercial landlords in South Australia have specific rules governing how much security they can request and how it must be managed. These rules primarily apply to "retail shop leases" falling within the Act's scope.
Maximum Bond Amount
For leases covered by the Retail and Commercial Leases Act, a landlord can request a security bond of up to three months' rent, exclusive of GST.
If the rent increases during the lease term, the landlord can request an increase to the security bond, provided:
- At least two years have elapsed since the bond was last increased.
- The total bond amount does not exceed the current three months' rent limit.
- 60 days' written notice is given to the tenant.
Bond Lodgement All security bonds paid under a retail shop lease must be lodged with the Small Business Commissioner (SBC).
- Landlords must lodge the bond within 7 days of receiving it.
- Registered agents have up to 28 days to lodge the bond.
The bond is held by the SBC for the duration of the lease. Neither the landlord nor the tenant can access the funds without mutual agreement or a court/tribunal order.
Bank Guarantees
As an alternative to a cash bond, it is very common in SA commercial leasing for the landlord to accept a bank guarantee instead. Under a bank guarantee, the tenant's bank promises to pay the landlord a specified amount on demand if the tenant defaults.
- No Statutory Cap: While the cash bond is capped at 3 months' rent, there is no legislated limit on the value of a bank guarantee. However, common practice is for bank guarantees to be between 3 and 6 months' rent.
- Return: The landlord is required to return a bank guarantee within two months after the lease expires and the tenant has fulfilled all their end-of-lease obligations (including "make good" requirements).
Returning the Cash Bond
At the end of the lease:
- Mutual Agreement: If both parties agree on deductions, they complete the appropriate form and submit it to the SBC.
- Dispute: If they cannot agree, either party can apply to the Magistrates Court (not SACAT for bond refund disputes specifically) for a determination on how the bond should be distributed.
Leases Outside the Act
For commercial leases that fall outside the scope of the Retail and Commercial Leases Act (e.g., annual rent exceeds $420,000, or the tenant is a publicly listed company), there are no statutory limits on the bond amount, no requirement to lodge the bond with the SBC, and no prescribed return timeline. Everything is governed entirely by the lease agreement.
Common Misconceptions in
Don't fall for these common myths. Know what the law actually says.
"I can hold the commercial bond in my own trust account."
For retail shop leases under the RCLA 1995, the bond must be lodged with the Small Business Commissioner. Landlords must do so within 7 days of receiving the funds. Holding it in your own account is a breach of the Act.
"A bank guarantee is always better than a cash bond for the landlord."
Bank guarantees offer flexibility — they can exceed the 3-month cash bond cap and don t require SBC lodgement. However, they can expire if the tenant s bank guarantee has a limited duration. Landlords must actively track expiry dates and require renewal before a guarantee lapses.
"If a commercial lease is outside the RCLA 1995, there are no rules on the bond."
Correct — for leases outside the Act s scope, there is no statutory cap on the bond amount, no requirement to lodge with the SBC, and no prescribed return timeline. The bond is entirely governed by the lease agreement and general contract law.
Best Practices for SA Commercial Landlords
- Lodge the Bond Promptly: A 7-day lodgement window is tight. Lodge the bond with the SBC within 48 hours to avoid any compliance risk.
- Document the Property Condition: Conduct a thorough pre-lease and end-of-lease inspection with photographs and video. This evidence is critical if the bond dispute escalates to the Magistrates Court.
- Track Bank Guarantee Expiry: If a tenant's bank guarantee has an expiry date, ensure it is renewed well before it lapses. If the guarantee expires, you lose your security.
Frequently Asked Questions:
If the rent increases during the lease term, the landlord can request a proportional increase to the security bond. To do so lawfully, at least two years must have elapsed since the bond was last increased, the total bond must not exceed the current three-months-rent cap, and the landlord must provide at least 60 days written notice of the requested increase. The tenant then has time to arrange the additional funds or a top-up bank guarantee.
If a commercial tenant enters voluntary administration or liquidation, the landlord s ability to call on the bond (or bank guarantee) depends on the timing and the insolvency legislation. Bank guarantees are generally more protected in insolvency scenarios because they are a direct obligation of the tenant s bank, not of the tenant itself. Landlords dealing with insolvent tenants should seek specialist commercial legal advice immediately, as insolvency law can delay or complicate bond claims.
Bond refund disputes for retail shop leases under the RCLA 1995 are resolved in the Magistrates Court — not SACAT (which handles most other commercial lease disputes). Both parties submit evidence (lease, condition report, invoices, ledger), and the court issues an order on how the SBC-held bond should be distributed. For leases outside the RCLA 1995, bond disputes are governed entirely by general contract law and may proceed in the District Court or Supreme Court depending on the sum in dispute.
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