Forms and fact sheets for private rental tenancies

Quick access to tenancy forms and applications for entering into and managing a rental agreement.

Start of tenancy

By law, the landlord or agent must give certain documents to the tenant. Use this list to follow both the legal and administrative requirements.

When moving in

Notice that sets out landlord/agents contact details (Section 48) (472KB PDF)

Inspection sheet to record the condition of the property (229KB PDF)

Information brochure about tenancy rights and obligations (540KB PDF)

Lease agreements

Fixed term lease agreement (250KB PDF)

Short fixed term lease (Form 1) (150KB PDF) – if the agreement is for 90 days or less

Periodic lease agreement (235KB PDF)

All bonds must be lodged with Consumer and Business Services.

The Bonds section further down this page lists the forms and publications that are used at the start of a tenancy.

Proving rent for Housing SA bonds

Landlords and agents will need to prove the rent amount when Housing SA guarantee a bond and provide rent in advance.

Confirming the rent amount

Online property owner/agent's declaration  (ePod form)

Advice for starting a tenancy

Lease agreement terms inconsistent with the  Residential Tenancies Act 1995 (258KB PDF)

Rent payments (400KB PDF)

Information about rent receipts and records (Fact sheet 3) (1MB PDF)

Information about lifestyle village agreements (211KB PDF)

During a tenancy

Use these forms to legally notify and record when the landlord or agent needs to enter the rental property.

Entering a property

Notice to enter premises (240KB PDF) – to inspect, carry out garden maintenance, other genuine purpose

Notice to tenant to check if breach remedied (Form 1A) (240KB PDF) - must be used before a landlord can re-enter the property to inspect items listed in a breach notice (Form 2)

Termination notices to end a tenancy

These forms must be used and completed correctly to make sure a valid notice is given.

For landlords and agents to use

Notice to tenant to remedy breach of agreement  (Form 2) (239KB PDF)

Notice to tenant to check if breach remedied (Form 1A) (220KB PDF) - must be used before a landlord can re-enter the property to inspect items listed in a Form 2 breach notice

Notice to tenant to end fixed agreement at end of term (Form 2A) (220KB PDF)

Notice to tenant to end a periodic agreement (Form 3) (270KB PDF)

Notice to tenant - agreement frustrated (Form 2B) (305KB PDF)

For tenants to use

Notice to landlord to end fixed agreement at end of term (Form 4B)  (265KB PDF)

Notice to landlord of termination of a periodic agreement (Form 5) (245KB PDF)

Notice to landlord to remedy breach of agreement (Form 4) (245KB PDF)

Notice to landlord - termination due to sale of property (Form 4A) (242KB PDF)

Notice to landlord - agreement frustrated (Form 4C) (225KB PDF)

Advice when ending a tenancy

Formula for advertising and re-letting fees (Fact sheet 4) (24KB PDF)

Information about section 90 applications (266KB PDF) - illegal purpose and disturbances

Reclaiming possession of a rental property and how to deal with abandoned goods (PDF 368KB)

You can lodge, manage and refund a bond using Residential Bonds Online . The forms listed below can also be used.

Starting a tenancy

Bond lodgement form (388KB PDF)

Agents direct debit form (19KB PDF)

Individual direct debit form (240KB PDF)

Refunds and end of tenancy

Check a bond status or find an unclaimed bond on residential bonds online .

Bond refund form (286KB PDF)

International money transfer (219KB PDF)

Administrative permissions

Landlord authority form (99KB PDF)

Changes to the tenancy

Change of ownership or agent (305KB PDF)

Change of tenant form (327KB PDF)

Advice for managing a bond

Managing a bond

Bond refunds (168KB PDF)

Providing documents to support a non-consented bond claim (PDF 383KB)

Related information

On this site.

  • Sharing a private rental property
  • Tenancy information in languages other than English
  • Pool and spa safety

Other websites

Tax and claiming expenses on residential rental properties - Australian Taxation Office

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Leasing - Banner

Retail & commercial leasing

Retail and Leases Commercial Guide_March2022

It is critical that you seek appropriate professional legal and financial advice as part of your consideration of entering into any lease or agreement to lease.

It is a legal requirement that lessees are provided with a copy of the 'Retail and Commercial Leasing Guide ' when they are provided with a copy of a proposed lease.

This guide incorporates the amendments passed by the South Australian Parliament in December 2019.

The information is provided as a guide to your rights and obligations under the  Retail and Commercial Leases Act 1995 (the Act), which governs most leases over retail shops and commercial leases where rent does not exceed $400,000 per annum in South Australia.

While the Act sets out your key rights and obligations, most of the day-to-day matters that arise under your tenancy will be contained in your actual lease.

Download a copy of the Retail and Commercial Leasing Guide here .

To view frequently asked questions, please click here .

The guide constitutes the information referred to in section 11(2) of the Retail and Commercial Leases Act 1995.

Whether you are a lessor or a lessee, you should ensure you know whether or not the Act applies to the lease before the lease is signed.

What leases does the Act apply to

Most (but not all) commercial leases in South Australia are subject to the Act. The Act regulates those leases to which it applies in a variety of ways.

Your premises do not have to be “retail” or a “shop” to be a retail shop lease or subject to the Act.

A retail shop lease includes any business premises which are used (even to a small extent) for the sale of goods to the public by retail, or the provision of services to the public, or are business premises to which the public is invited to negotiate for the supply of services.

Accordingly, your lease may still be subject to the Act even if your premises are used for more than one purpose or if your premises include an office, a restaurant or cafe, a showroom or display yard, professional rooms or include other “non-retail” type premises.

It is your use of the premises that determines whether or not your lease is subject to the Act.

The Act does not apply to leases (as excluded in the Act) including:

  • Leases where the annual rent exceeds the threshold prescribed by the Act from time to time (the threshold is currently $400,000 per annum exclusive of GST).
  • Leases where the lessee is a public company as defined under the Corporations Act 2001 , a subsidiary of a public company, a foreign company registered on an overseas stock exchange, an authorised deposit taking institution or a company authorised to carry on the business of insurance. * Leases where the lessee is a commonwealth, state or local government body, agency or instrumentality.
  • The lease is for a short term of one month or less.
  • Some registered leases which may, when originally executed, exceed the rental threshold but later are captured by the Act.

Further legal advice should be obtained if there is any doubt over whether a particular lease or proposed lease is or is not subject to the Act.

Leasing a business premises is a very large and complex commitment. It is extremely important that you take time to consider the suitability of the premises and the lease that will cover it.

Before you make any commitment, you should ensure that you have:

  • Incorporated any representations made about the premises or how the lease will operate into the lease.
  • Inspected the premises. It is advisable for the lessee and lessor to complete and sign a ‘condition report’ recording the condition of the premises, any fixtures, fittings and plant and equipment. This can include an assessment of the utilities provided and how they are metered.
  • Received independent financial advice about your financial obligations under the lease.
  • Received independent legal advice about the terms of the lease.
  • Contacted your insurance broker/company to discuss and clarify your insurance obligations under the lease.
  • Contacted the local council to ascertain that the business activity you wish to conduct is allowed under the zoning for the site. You could also ask what development plans the council may have or has received for the area.
  • take good quality and comprehensive photos. As there is no standardised condition report, you should have one drawn up.
  • you should also clarify with council whether there are any specific health or environmental requirements that you need to comply with.

Lease documentation

A lessor must provide a draft or sample copy of a lease to any prospective lessee as soon as negotiations are entered into. The lease, subject to the Act, contains all the terms and conditions under which the premises are being leased.

If a lessee is offered an “Offer to Lease”, an “Agreement to Lease”, or any other document, with or without a draft copy of the lease, the lessee should proceed with caution as these documents can lead to the lessee being legally bound to accept a formal lease at a later date. The lessee should ensure that they do not, in any way, indicate that they accept the terms in these documents, or sign them, until after they have obtained independent legal advice.

The Act requires that the most recent version of this Retail and Commercial Lease Guide, be provided to the lessee at the same time as the lessee is provided with the draft or sample of the lease. In addition to the lease, the lessor must provide the lessee with a Disclosure Statement before the lease is entered into.

A Disclosure Statement details some of the most important aspects of the lease, including rent, rent reviews, schedule of outgoings, term of the lease, options to renew, lettable area, tenancy mix, permitted use and many other details. Penalties may apply to a landlord and/or agent who fails to provide a copy of the draft or sample lease and/or the disclosure statement and/or the Retail & Commercial Lease guide.

As with the lease, a lessee should seek legal advice as to the contents of a Disclosure Statement.

The Act provides that retail shop leases must be for a minimum of 5 years, including any options to renew. A lease can be for a head term of 5 years, or any combination that totals 5 years. For example a lease with a head term of 1 year, with two rights of renewal for 2 years each would be in accord with the Act, as the total term is 5 years. If this requirement is not satisfied, the Act will change the lease without either party’s agreement.

There are some exceptions to this requirement, including that the:

  • lease is a short fixed term lease of 6 months or less
  • lessee has already been in possession of the premises for at least 5 years
  • lease contains a Certified Exclusionary Clause
  • If a lease contains a Certified Exclusionary Clause, the Act requires that a solicitor (who is not acting for the lessor) or the Small Business Commissioner provide a certificate which certifies that they have explained to the lessee that the lessee would, but for this certificate, be bound to a minimum 5 year term.
  • The solicitor or Small Business Commissioner must also certify that they have received credible assurances from the lessee, that the lessee, was not acting under any coercion or undue influence in consenting to the inclusion of this clause into the lease. A fee will apply for the issue of a certificate.

You can apply for a Certified Exclusionary Clause Certificate here .

Option to renew

If a lease contains an option to renew, both parties, but particularly the lessee, need to be aware of what the lease provides in relation to when and how an option can be exercised. If a lessee does not exercise the option within the timeline and manner stipulated in the lease, the lessor may not be obliged to renew it.

If the option to renew is to be done at current market rent, then the lessee can request an early determination of the market rent. The lessee must make this request in writing during the period that starts 6 months before and ends 2 months before the last day on which the option may be exercised under the lease. For example, if the option is due to be exercised by 1 January, the lessee must make the request no earlier than 1 July and no later than 31 October.

The market rent is to be determined under the same requirements outlined under market rent review.

Tip – both parties should note these dates in their calendars as a prompt for when they should begin the renewal process.

End of lease

The Act prescribes rules that must be followed when a lease is due to expire.

Lessees in a shopping centre have a preferential right of renewal when their lease expires. The legislation sets out the rules that govern the granting of the preferential right. Unless the lessee notifies the lessor in writing 12 months before the lease is due to expire, that they do not want to renew or extend, the lessor must presume that the lessee wants to exercise their preferential right. Therefore the lessor must begin negotiations with the lessee for a renewal or extension of the lease between 6 to 12 months before the lease is due to expire.

There are some exceptions to this, including:

  • the lease is a short term lease for a fixed term of 6 months or less
  • the lease contains a Certified Exclusionary Clause
  • the lessor reasonably wants to change the tenancy mix
  • the lessor requires vacant possession of the premises for demolition, or substantial repairs or renovation.

If a lessee does not have a right of renewal, the lessor must, at least 6 months (but not more than 12 months) before the end of the lease, give the lessee written notice of this and also give reasons to explain why the lessee does not have a preferential right of renewal.

For retail shop leases that are not in a shopping centre, and do not have any further right to renew or extend the lease, the lessor must give the lessee notice in writing stating whether or not they are offering a renewal of the lease. The notice must be given not less than 6 months or more than 12 months before the lease is due to expire.

For example, if the lease is due to expire on 31 December, the notice must be given sometime between 1 January and 30 June proceeding the expiry.

Tip – you should record these dates in your calendar so you do not overlook it.

Termination for a breach of the lease

Most leases permit the lessor to terminate the lease when there is a breach by the lessee. Landlords are usually required to serve prior notice (usually 14 days) of the breach so that the lessee has an opportunity to remedy the breach before the lease is terminated. The lessor may not always have to serve notice for non-payment of rent before taking action to gain re-entry to the premises.

Termination of the lease can have severe consequences for the lessee and in most cases will include:

  • the lessor re-entering the premises, closing the lessee’s business and changing the locks of the premises
  • the lessee being liable to the lessor for all of the arrears then owing, all of the lessor’s costs (including the costs of re-letting the premises), interest plus all of the rent and other amounts payable under the lease for the remaining term of the lease
  • the lessor calling on any bond or bank guarantee provided by the lessee, or pursuing any personal guarantors.

In addition, the closure of the lessee’s business can result in the lessee not being able to meet legal obligations to other third parties such as banks, suppliers and customers.

Accordingly, not complying with the lease can have long lasting consequences to the financial standing, credit history and reputation of a lessee.

Tip - it is imperative you understand your lease, in particular your financial obligations throughout the term of the lease, and that you plan/budget to ensure such financial obligations are met.

Tip - if it seems likely that you are going to fall behind with your rent payments, you should contact the lessor or their agent as soon as possible to try to negotiate a solution and avoid a breach notice that may subsequently lead to re-entry by the lessor.

Tip - if you fall into arrears under your lease, or anticipate falling into arrears, or if you receive a default notice from your lessor or if your lease is terminated, you should immediately seek advice with a view to resolving the matter as promptly as possible.

The initial rent under a lease is commonly referred to as base rent. The Act does not regulate what the base rent should be. The base rent payable under a lease is negotiated between the lessor and lessee.

A lessee can consult other lessees in the same complex, lessees in neighbouring premises, land agents, commercial valuers, conveyancers or private lease negotiators to help determine what would be a fair rent for the premises.

The SASBC, nor any government agency, can assist with this.

Rent review

Most leases will provide that the rent can be reviewed on a regular basis, usually every 12 months.

The lease will also stipulate the method that is to be used for a rent review. Some common methods are:

  • a set percentage increase
  • consumer Price Index (CPI) - There are many measures of the CPI. The lease should detail which CPI measure is to be used
  • market review
  • any other agreed formulae or method.

The types of review can vary over the life of the lease. However the lease cannot allow the lessor to choose between two methods and select the one that gives the greatest return – for example, the lease cannot state that the increase is to be CPI or 5% whichever is the greatest.

Market rent review

There is no set time for when a market review of the rent can be undertaken. A market review is usually undertaken when exercising an option to renew. However a market review does not have to be undertaken if the parties can agree on what the new rent should be.

The Act provides that if rent is to be changed to reflect the current market rent, it must be done on the basis that the premises are unoccupied and the value of the lessee’s goodwill and fixtures and fittings is to be excluded in any assessment.

If the parties cannot agree on a new market rent, the Act provides that the rent will be determined by a valuation carried out by a person appointed by the parties.

If the parties cannot agree on who this should be, they can apply to the Australian Property Institute which will appoint an independent valuer to undertake the assessment. The costs of this are to be shared equally between the parties.

The Disclosure Statement must list all the outgoings that the lessee is liable for and explain the basis under which they are to be apportioned.

Examples of outgoings include council rates, water charges, utilities, insurance, pest control, cleaning, emergency services levy, management fees and audit fees.

A common, but not exclusive, measure used as the means of apportioning outgoings to lessees is the lettable area of the premises. For example, if you are leasing 100 sqm and the total lettable area for the complex is 1000 sqm, you would be liable for 10% of the outgoings.

The amount allocated to each outgoing is to be the estimated budget for each outgoing for the current accounting period (usually the financial or calendar year). Apart from including this information in the initial Disclosure Statement (when the lease is entered into), the lessor must provide this estimate of outgoings at least one month before each accounting period.

Within 3 months after the end of each accounting period, the lessor must give the lessee a report that shows all expenditure for the outgoings that the lessee is liable for. This report must be prepared by a registered company auditor. However the report does not have to be audited if the lessee is only liable for water and sewerage rates and charges, local government rates and charges, and insurance. However the report must then be accompanied by receipts for this expenditure.

Under a retail shop lease, land tax cannot be charged to a lessee, however, the lessor can incorporate it in setting the rent for the premises.

Tip - you should discuss the composition of, and the basis for, the apportionment of outgoings with your advisor.

Which other financial obligations can be passed on to the lessee?

In addition to rent and outgoings, lease preparation costs - only 50% of the costs incurred by the lessor, can be passed on to a lessee.

Tip – be aware that there is no set figure for what this could cost. When you begin negotiations, you should ask how much this is likely to be and incorporate this into the terms of the lease.

A lessor can request that the lessee pay a security bond of up to three months’ rent.

If a bond is requested the lessor or agent must :

  • be lodged with the SASBC.
  • lessor must lodge the bond within 7 days of receiving the payment. A registered agent must lodge the bond within 28 days of receiving the payment.
  • the payment must be lodged with a Retail and Commercial Lodgement of Security Bond Form, signed by both parties. Only original signatures will be accepted.

At the end of the tenancy, a claim can be made for the bond by either or both parties. If both parties agree on who should receive the bond, they can lodge a Retail and Commercial Security Bond Refund Form with the SASBC. If the parties cannot agree, either party can lodge the refund form and the SASBC will attempt to negotiate a settlement between the parties. If an agreement cannot be reached the matter will be referred to the Magistrates Court for a determination.

Bond lodgement and return forms are available by clicking here .

Tip – do not sign a blank refund form.

A lessor can request a guarantee as security under the lease. There is no limit to the value of the guarantee, but it is common practice for bank guarantees to be set at the equivalent of one to six months rent. Lessors must return a bank guarantee within 2 months after the tenant has fulfilled any obligations required at the end of the lease.

Tip – as there is no legislated limit, you should negotiate on the amount of the guarantee as well as the conditions for its release at the end of the tenancy and incorporate this in your lease terms. The guarantee may be a bank guarantee, security bond, personal and/or director’s guarantee.

Lease registration benefits

As the lessee, you will be responsible for the cost of registering a lease. It is not a compulsory requirement to register a lease. However it is advisable for a lessee to have their lease registered as it protects their leasehold interest in the property if the premises are sold.

If a lease is to be registered, the lessor must lodge the lease for registration within one month after the lease is returned to the lessor or the lessor’s lawyer or agent following its execution by the lessee (if it is agreed that the lease will be registered) and provide a copy of the registered lease to the lessee within one month after it is returned following registration

Tip - your legal adviser or conveyancer can tell you what the estimated cost would be.

Registration of a lease that falls outside the scope of the Act

A lessor may decide to protect a lease that falls outside of the rental threshold when the lease is entered into by lodging the lease for registration within 3 months after both parties have executed the lease and providing written notice to the lessee within 1 month of lodgement.

The lease shall remain outside the Act regardless of any increase to the threshold that would bring the lease within the scope of the Act. Any renewal of the registered lease is also protected provided that the renewal is registered no later than 2 months after the date the lease would expire if not renewed and the lessor provides written notice to the lessee within 1 month of lodgement.

Condition of the premises

Repairs and maintenance.

Most commercial leases do not require the lessor to provide or maintain premises in any particular standard or condition, nor do they require the lessor to undertake ongoing repairs or maintenance (including repairs or maintenance to building services such as plumbing, drainage or airconditioning).

While the Act implies a statutory warranty from the lessor that the premises are suitable, in the majority of cases the lessor is able to exclude such warranty. Most leases will in fact make the lessee responsible for the condition, repair and maintenance of the premises.

The lease and Disclosure Statement should be comprehensively reviewed before the lease is entered into so that you are aware of the obligations imposed upon you in respect of cleaning, maintenance and repairs to the premises. Just because the lease says a particular repair or maintenance obligation is not a lessee responsibility does not mean that it is a lessor responsibility. The lessee should assume the lessor will not do anything that the lease does not say the lessor must do.

The Act prohibits a lease requiring a lessee to incur “capital expenditure” unless such expenditure is disclosed in the Disclosure Statement and is of the sort permitted by the Act.

Seek professional advice if the lease does not clearly set out who is responsible for particular maintenance or repair obligations, or if you have any concerns about the condition of the premises you are leasing.

Tip -before you sign any document or take possession of any premises you should have the premises properly inspected to ensure (amongst other things):

  • the premises are suitable for your use of them
  • the premises are structurally suitable and sound
  • building services are in suitable and working order
  • the premises comply with relevant legislation and building standards, particularly those that apply to your intended use of them.

Tip -  many lease disputes arise over whether a lessee caused damage to the premises or whether the premises were damaged before the lease began.

It is prudent for the lessor and the lessee to jointly inspect the premises before the lease commences and to document/photograph any pre-existing damage.

Warranty of fitness for purpose

The Act provides that if, prior to entering into the lease, the lessee notifies the lessor of the business activity they propose to undertake in the premises, the lease is taken to include a warranty that the premises will be structurally suitable for that purpose. However the warranty can be excluded if, before the lease is executed, the lessor gives notice of the exclusion in the manner required by regulation.

Other information

Permitted use/exclusivity.

The permitted use clause in a lease describes the business and associated activities that can be undertaken on the premises. In addition to checking with the local council a lessee should consider what future plans they have for the business and whether the permitted use allows for this, for example:

  • For a hair salon, is the activity limited to hair treatments, or can the lessee subsequently expand to include beauty treatments?
  • For a dog grooming business, can the lessee subsequently sell pet food and accessories?
  • For a food outlet, can the lessee change or expand the menu at will?

The description in the permitted use clause does not mean that the lessee has exclusive rights to carry on that particular type of business or associated activity in the shopping centre or group of shops. This is a separate issue and needs to be discussed between the parties.

Any arrangement struck around exclusivity should be incorporated into the lease.

If a lessee (assignor) wants to sell their business, relocate their business, or cease operating, it is common practice to have their lease assigned (transferred) to a new lessee (assignee). Another option, particularly if the lease is close to the end of the term, is for the new lessee and lessor to enter into a new lease. However the lessor is not under any obligation to agree to this.

Under the Act, both the lessor and lessee have obligations to fulfil before an assignment can happen.

The assignor (the current lessee) must provide the assignee (the proposed new lessee) with a copy of the Disclosure Statement provided to them by the lessor. If the assignment relates to an ongoing business, the assignor should, to obtain the benefit of the assignor’s release from liability set out below, provide the assignee and the lessor with an assignor’s Disclosure Statement which contains all the information required by regulation.

The lessor can also withhold consent if the proposed assignee:

  • wishes to change the permitted use for the premises
  • is unlikely to be able to meet their financial obligations under the lease
  • has retailing skills are inferior to those of the assignor
  • if the lessee has not complied with procedural requirements for obtaining the lessor’s consent.

If the lessor withholds consent, they must give the lessee a written statement detailing the reasons for this.

However a lessor must deal with a request for consent expeditiously and is deemed to have given consent, if they have not responded within 42 days after the request was made.

Provided all procedural requirements under the Act have been complied with , an assignor’s liability following the assignment of a lease is limited to:

  • 2 years after the lease was assigned
  • the date that the lease expires
  • the date on which the lease may subsequently be renewed or extended
  • whichever occurs first.

The lessee is usually liable for the lessor’s reasonable expenses (including legal fees) incurred in the granting of the consent to assign the lease.

Sub leasing

A lessor, under the Act, can reserve the right to refuse consent to granting a sublease.

However, if a lease allows for subleasing, both parties must ensure they follow the process outlined in the lease.

Under a sublease arrangement the sublessor’s (formerly the lessee) obligations under the existing lease remain unchanged. In addition the sublessor incurs the same obligations that their lessor has to them, including the obligation to provide a draft lease and Disclosure Statement (refer page 4).

Tip – both parties should ensure that they seek independent legal advice to clarify these responsibilities and prepare the documentation necessary to give effect to the sublease arrangement.

A retail shop lease in a retail shopping centre can contain a relocation clause which allows the lessor to relocate the tenant to other premises.

If a lease contains such a clause the following rules apply:

  • the lessor must provide the lessee with sufficient information that shows there is a genuine proposal to refurbish, redevelop, or extend the premises and that the proposed works cannot be carried out practicably without vacant possession of the premises
  • the lessor must give the lessee 3 months notice in writing, that also includes details of the alternative premises being offered
  • the lessee must be offered a new lease on the same terms and conditions (excluding rent), for the remainder of the term
  • within one month of receiving the relocation notice, the lessee can terminate the lease by giving written notice to the lessor and the lease is therefore terminated 3 months after the relocation notice.

Tip – at the lease negotiation stage, a lessee should discuss with the lessor whether there are any plans to refurbish, redevelop or extend the premises, and if so when. This information should be written into the lease and Disclosure Statement.

A retail shop lease can contain a demolition clause which allows the lessor to terminate the lease if the premises are to be demolished.

If a retail shop lease allows the lessor to terminate the lease on these grounds the following rules apply:

  • the lessor must give the lessee sufficient information that shows that there is a genuine proposal to demolish the building within a reasonably practicable time after the lease is terminated
  • the termination notice must be in writing and gives at least 6 months notice
  • during this time, the lessee can terminate by giving at least 7 days notice in writing.

Tip – at the lease negotiation stage, a lessee can discuss with the lessor whether they have any plans to demolish and if so, when. This information should be written into the lease and Disclosure Statement.

Marketing plan for advertising and promotion

Applies to shopping centre leases only

Retail shop leases in a shopping centre cannot require a lessee to undertake advertising or promotion of their business. However a lessee can be required to contribute to a marketing plan for advertising and promoting the centre.

If the lease does provide for this, the following rules apply:

  • the lessor must, at least 2 months before the start of each accounting period of the lessor, make available to the lessee, a detailed marketing plan including the proposed expenditure
  • within 3 months after the end of each accounting period, the lessor must provide a written report that details all expenditure for advertising and promotion. This report must be prepared by a registered company auditor

The Act provides for the Magistrates Court, responsible Minister or the Small Business Commissioner to provide the parties to a lease with an exemption to part, or all, of the Act where appropriate and reasonable.

Information on how to apply for an exemption can be found here .

Dispute resolution

If a lessee or lessor has a dispute, the SASBC can assist through our dispute resolution process.

Information can be found here .

Checklist for both lessees and lessors can be found on page 18 of the guide. You can download a copy here .

Glossary of key terms

Certified exclusionary clause Is a clause of a retail shop lease which requires a certificate signed by a legal representative who does not act for the lessor or the Small Business Commissioner, and who endorses the lease stating that, at the request of the lessee, the provisions of the lease have been explained and that credible assurances have been given by the lessee that they have not been coerced or placed under undue influence to accept the inclusion of a provision. This mostly relates to the term of the lease (usually being less than 5 years).

Disclosure statement A written statement containing information relating to the premises, use of the premises, term of lease, tenant mix, all associated costs involved with the lease (often referred to as “outgoings”) and consequences of breaching the lease. Information contained in this document must not be false or misleading.

Lease A binding legal document between two parties. A lease must be provided to a potential lessee at the negotiating stage by the lessor.

Lessee Person who has the right to occupy premises as permitted to do so by the lessor.

Lessor Person who grants permission for a lessee to occupy premises.

SASBC The Office of the South Australian Small Business Commissioner which has been established (in relation to the Act) to:

  • administer the Act;
  • assist parties who have a complaint/dispute with another party in regard to the Act
  • facilitate a mediation service for disputing parties
  • provide information relating to the Act;
  • manage security bonds.

Note – The SASBC does not provide legal and/or financial advice.

Party The persons involved in a lease.

Preferential right of renewal If the premises are to be re-leased and an existing lessee wants to renew or extend the lease, the lessor must give preference to the existing lessee over others. The lessor is to presume that the lessee is seeking to renew or extend the lease unless the lessee has notified the lessor in writing within 12 months prior to the expiration of the lease. A few clauses surround the lessor not having to grant preferential right including if the tenancy mix is to alter, the existing lessee is guilty of a substantial breach(es), the lessor requires vacant possession, renewal of the lease would substantially disadvantage the lessor or if the lessee’s right of preference is excluded by regulation. These rights only apply to a lease in a retail shopping centre.

Retail shop Business premises where:

  • goods are sold to the public by retail
  • where services are provided to the public
  • the public are invited to negotiate for supply of services
  • classified by regulation as premises to which the Act applies.

Retail shopping centre A group of premises whereby at least 5 are retail shops, that they are all owned by the same person, are located in the same building or other buildings which are adjoined or separated by common areas and that the area is generally promoted as a shopping centre, mall, court or arcade.

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A resident may enter into a sub-letting agreement with another person either in writing or orally when:

  • there are park rules in force that define the terms on which the park owner will act as a managing agent for the agreement and the services to be provided by the park owner; and
  • the park owner consented; and
  • there is a sub-tenancy managing agent agreement between the resident and the park owner.

The park owner can also make a park rule declaring that no sub-letting agreements can be made by residents.

[See Residential Parks Act 2007 (SA) s 51].

An effective assignment of the resident's interest in a residential park agreement results in another person taking over the lease of the site or dwelling. This means that the resident is no longer liable under the agreement. An assignment can be verbal or written and must have the park owner's written consent .

A resident should ensure that they get consent because if they don’t they may still be considered liable under the agreement, or the park owner could terminate the agreement. A park owner can not unreasonably withhold consent and will be assumed to have consented if they do not respond within seven days of receiving a written request for consent with the assignee's full details. Always seek advice before entering into an agreement assigning your interest to another party.

At least 14 business days before an assignment, the resident assigning their interest or a person authorised to act on their behalf must advise the assignee to contact the park owner to request the prescribed information [s 48(12)]. Failure to do so can result in an expiation fee of $1,000 or a fine of up to $25,000. It is a defence to prove the defendant believed on reasonable grounds that the assignee had already contacted the park owner to request the prescribed information. A park owner must provide the prescribed information within 7 business days after receiving the request, or such longer period as may be agreed. Failure to comply with these provisions does not, however, invalidate an assignment.

[See Residential Parks Act 2007 (SA) s 48].

Selling a dwelling owned by a resident

A resident owns a dwelling and enters into a residential site agreement with the park owner. The fixed term of the agreement is for four years. After two years the resident decides to sell the dwelling. The resident has the right to sell the dwelling but must first inform the park owner of their intention to sell, before putting up a for sale sign. The resident must also obtain the park owner's written consent to assign and effectively transfer the residential site agreement to the buyer of the dwelling.

[Residential Parks Act 2007 (SA) ss 48 and 50].

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How Do You Assign or Transfer a Commercial Lease?

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By Jessica Dinh Lawyer

Updated on December 15, 2023 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

  • 1. Seek Your Landlord’s Consent 

2. Deed of Assignment

3. transferring a retail lease, key takeaways.

If you lease a commercial property to operate your business, there may be situations where you need to transfer the lease. There are usually two situations when a tenant will transfer (also known as an assignment ) a commercial lease to another party (the assignee) before the end of a lease term. Namely, where the tenant is:

  • selling their business, and the purchaser agrees to accept the existing lease rather than enter into a new lease with the landlord; or
  • is proposing to exit the lease and has found a party who will take on the existing lease.

This article explains how the transfer of a commercial lease works. It also explains the critical terms of the deed of assignment from the perspective of the landlord, tenant and assignee.

1. Seek Your Landlord’s Consent 

As soon as you propose an assignment as a tenant, you should:

  • review the existing lease to identify if the lease can be assigned;
  • identify the requirements of landlord’s consent upon assignment; and
  • correspond with the landlord or agent as to consent and approval of the proposed assignee under the lease. 

When seeking your landlord’s consent for the assignment, the proposed new tenant must usually provide their financial and business references to the landlord.

Can a Landlord Refuse to Assign a Retail Lease? 

If the lease is a retail lease, the landlord will not be able to withhold consent to an assignment unreasonably. The retail legislation (different in each state) provides the grounds on which the landlord can withhold their consent. These generally include the:

  • assignee proposes to change the permitted use;
  • assignee has financial resources or retailing skills that are inferior to the assignor, and
  • assignor has not complied with the relevant steps, per the retail legislation in that particular state, including providing a disclosure statement.

Ensure that you check the retail legislation in that particular state when carrying out an assignment.

After obtaining the landlord’s consent, a deed of consent to assignment is prepared (deed of consent).

A deed of consent is a legal document that outlines that the:

  • landlord confirms their consent to the transfer of lease;
  • tenant agrees to transfer their entire interest in the lease to the assignee from a specific date (the assignment date); and
  • assignee, or new tenant, agrees to assume the rights and obligations of the lease as if they were the original tenant (such as repairs, security and payment of rent and outgoings) from the assignment date. This will continue until the end of the lease term and during any option or renewal terms.

The Landlord

Generally, the landlord’s key concern is that the transfer does not affect their rights under the lease. The landlord can address this concern by ensuring that the original tenant (assignor) has complied with all of their obligations under the lease until the assignment date. The landlord will have the right to take action against the tenant after the assignment date for any existing breach of the lease. 

Additionally, the landlord will want to make sure that the assignee can comply with the lease obligations. This will often involve an assessment of the assignee as a tenant. The landlord will thoroughly examine the information before confirming their consent to the transfer. This might include: 

  • financial statements; 
  • business history; and 
  • professional references. 

Finally, there is usually an agreement about who is liable for the costs of the deed of assignment. The landlord’s lawyer usually prepares the agreement. However, the outgoing tenant or the incoming tenant pays these costs, not the landlord.

The deed of assignment usually requires the assignee to give the relevant security and guarantees.

The Outgoing Tenant

As the outgoing tenant, your key concern is to be released from your obligations under the lease from the assignment date. The deed of assignment can address this concern by specifying that:

  • the tenant is released from any claims or liabilities under the lease from the assignment date (provided that there is not an existing breach of the lease); and
  • if the tenant has provided any security, it is to be returned or refunded.

It is important for you to remember that you are bound to the terms of the lease until the transfer of the commercial lease is formalised through the deed of assignment. Accordingly, you should continue to comply with your obligations under the lease until the assignment date.

On that note, a landlord might not agree to release you entirely from your obligations if the retail legislation in your state does not prevent this. This means that if the new tenant defaults, you could be responsible for fulfilling the lease obligations. In that case, you would need guarantees or an indemnity from the new tenant.

If the transfer of deed has to be registered, typically with retail leases, you (the assignor) usually organise the registration of the transfer, whose costs are divided with the new tenant  (the assignee).

The Assignee

The new tenant’s, or the assignee’s, key concern is for the landlord to accept the transfer of the commercial lease from the assignment date. The deed of assignment can address this concern by providing that:

  • the landlord accepts the assignee as tenant from the assignment date;
  • the landlord will observe their obligations specified in the lease in favour of the assignee; and
  • if required in the relevant state, the parties sign a transfer of lease form and register the transfer at the land titles office.

The assignee should ensure that they have reviewed the contents of the commercial lease (including the disclosure statement if it is a retail lease). Then, they must review the lease before signing the deed of assignment. This is because the assignee will need to comply with the obligations of the tenant from the assignment date. These obligations may include the provision of security and a personal guarantee.

A personal guarantee is taken on by an individual to guarantee the obligations of another individual or entity. For example, the assignee providing may provide a personal guarantee where a particular party becomes a guarantor. If you cannot meet your obligations (such as to pay the lease), then the guarantor will have to meet that obligation themselves.

Before finalising the deed of assignment, it is important that the landlord, assignor and assignee agree on who bears the costs of preparing, negotiating and registering the deed of assignment. Generally, you, as the assignee, will bear the costs. However, you may choose to add a cap or exclude negotiation costs. 

If the lease you are transferring is a retail lease, the tenant will typically need to give the assignee a disclosure statement. This statement also includes details of any changes to the disclosure statement that the landlord provided when the lease was first entered into.

The disclosure statement outlines the vital information that the assignee needs to know, including the:

  • current annual rent under the lease;
  • current estimated outgoings payable under the lease;
  • term of the lease and any options to renew; and
  • details of the premises. 

Generally, the tenant may request an updated disclosure statement from the landlord before the transfer of the commercial lease. The landlord has an obligation to provide the updated disclosure statement, usually within 14 days from the date of the request.

The disclosure statement requirements differ between the states and territories. For example, in:

  • New South Wales, the assignee must receive the disclosure statement at least seven days before the date of the transfer; and
  • Victoria and Queensland, the assignee must receive the disclosure statement at least seven days before the assignor requests the landlord’s consent.

The consequences of failing to provide a disclosure statement also differ between the states and territories. For example, the assignee may:

  • withhold payment of rent;
  • seek compensation from the landlord; or
  • terminate the lease within a specific timeframe.

It is essential for all parties to be aware of the requirements and consequences of the disclosure statement provisions in their particular state or territory.

Additionally, transferring a lease may also lead to stamp duty implications . Stamp duty is a tax imposed on the purchase of assets and transactions of property. Therefore, if you are transferring a lease, you will commonly have to pay stamp duty. It is important that you are aware of the circumstances where you, as a tenant, will be required to pay stamp duty.

Front page of publication

A factsheet that sets out the three ways to end a commercial lease in Australia: surrendering your lease, assigning it or subletting it.

Whether you are a landlord, tenant or assignee, it is crucial that you understand your rights and obligations when transferring a commercial lease. Further, the transfer of a retail lease leads to additional requirements and consequences related to the disclosure statement. Finally, you need to be aware of the steps you should take to ensure a smooth assignment.

If you need assistance with drafting or reviewing the terms of a deed of assignment, our experienced leasing lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page .

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Lease Assignment Agreement

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Lease Assignment Agreement

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A Lease Assignment Agreement is a short document that allows for the transfer of interest in a residential or commercial lease from one tenant to another. In other words, a Lease Assignment Agreement is used when the original tenant wants to get out of a lease and has someone lined up to take their place.

Within a Lease Assignment Agreement, there is not that much information included, except the basics: names and identifying information of the parties, assignment start date, name of landlord, etc. The reason these documents are not more robust is because the original lease is incorporated by reference , all the time. What this means is that all of the terms in the original lease are deemed to be included in the Lease Assignment Agreement.

A Lease Assignment Agreement is different than a Sublease Agreement because the entirety of the lease interest is being transferred in an assignment. With a sublease, the original tenant is still liable for everything, and the sublease may be made for less than the entire property interest. A Lease Assignment transfers the whole interest and puts the new tenant in place of the old one.

The one major thing to be aware of with a Lease Assignment Agreement is that in most situations, the lease will require a landlord's explicit consent for an assignment. The parties should, therefore, be sure the landlord agrees to an assignment before filling out this document.

How to use this document

This Lease Assignment Agreement will help set forth all the required facts and obligations for a valid lease assignment . This essentially means one party (called the Assignor ) will be transferring their rights and obligations as a tenant (including paying rent and living in the space) to another party (called the Assignee ).

In this document, basic information is listed , such as old and new tenant names, the landlord's name, the address of the property, the dates of the lease, and the date of the assignment.

Information about whether or not the Assignor will still be liable in case the Assignee doesn't fulfill the required obligations is also included.

Applicable law

Lease Agreements in the United States are generally subject to the laws of the individual state and therefore, so are Lease Assignment Agreements.

The Environmental Protection Agency governs the disclosure of lead-based paint warnings in all rentals in the States. If a lead-based paint disclosure has not been included in the lease, it must be included in the assignment. Distinct from that, however, required disclosures and lease terms will be based on the laws of the state, and sometimes county, where the property is located.

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At the end, you receive it in Word and PDF formats. You can modify it and reuse it.

A guide to help you: Tenants and Subtenants Obligations under a Sublease Agreement

Other names for the document:

Assignment Agreement for Commercial Lease, Assignment of Commercial Lease, Assignment of Lease, Assignment of Residential Lease, Assignment Agreement for Lease

Country: United States

Housing and Real Estate - Other downloadable templates of legal documents

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  • Rent Payment Plan Letter
  • Residential Lease Agreement
  • Sublease Agreement
  • Tenant Maintenance Request Letter
  • Rent Receipt
  • Late Rent Notice
  • Notice of Intent to Vacate
  • Roommate Agreement
  • Quitclaim Deed
  • Parking Space Lease Agreement
  • Short-Term Lease Agreement
  • Tenant Security Deposit Return Request
  • Termination of Tenancy Letter
  • Change of Rent Notice
  • Complaint Letter to Landlord
  • Lease Amendment Agreement
  • Notice of Lease Violation
  • Consent to Sublease
  • Eviction Notice
  • Other downloadable templates of legal documents

lease assignment sa


Assignment of Lease

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What is an assignment of lease.

The assignment of lease is a title document that transfers all rights possessed by a lessee or tenant to a property to another party. The assignee takes the assignor’s place in the landlord-tenant relationship.

You can view an example of a lease assignment here .

How Lease Assignment Works

In cases where a tenant wants to or needs to get out of their lease before it expires, lease assignment provides a legal option to assign or transfer rights of the lease to someone else. For instance, if in a commercial lease a business leases a place for 12 months but the business moves or shuts down after 10 months, the person can transfer the lease to someone else through an assignment of the lease. In this case, they will not have to pay rent for the last two months as the new assigned tenant will be responsible for that.

However, before the original tenant can be released of any responsibilities associated with the lease, other requirements need to be satisfied. The landlord needs to consent to the lease transfer through a “License to Assign” document. It is crucial to complete this document before moving on to the assignment of lease as the landlord may refuse to approve the assignment.

Difference Between Assignment of Lease and Subletting

A transfer of the remaining interest in a lease, also known as assignment, is possible when implied rights to assign exist. Some leases do not allow assignment or sharing of possessions or property under a lease. An assignment ensures the complete transfer of the rights to the property from one tenant to another.

The assignor is no longer responsible for rent or utilities and other costs that they might have had under the lease. Here, the assignee becomes the tenant and takes over all responsibilities such as rent. However, unless the assignee is released of all liabilities by the landlord, they remain responsible if the new tenant defaults.

A sublease is a new lease agreement between the tenant (or the sublessor) and a third-party (or the sublessee) for a portion of the lease. The original lease agreement between the landlord and the sublessor (or original tenant) still remains in place. The original tenant still remains responsible for all duties set under the lease.

Here are some key differences between subletting and assigning a lease:

  • Under a sublease, the original lease agreement still remains in place.
  • The original tenant retains all responsibilities under a sublease agreement.
  • A sublease can be for less than all of the property, such as for a room, general area, portion of the leased premises, etc.
  • Subleasing can be for a portion of the lease term. For instance, a tenant can sublease the property for a month and then retain it after the third-party completes their month-long sublet.
  • Since the sublease agreement is between the tenant and the third-party, rent is often negotiable, based on the term of the sublease and other circumstances.
  • The third-party in a sublease agreement does not have a direct relationship with the landlord.
  • The subtenant will need to seek consent of both the tenant and the landlord to make any repairs or changes to the property during their sublease.

Here is more on an assignment of lease here .

lease assignment sa

Parties Involved in Lease Assignment

There are three parties involved in a lease assignment – the landlord or owner of the property, the assignor and the assignee. The original lease agreement is between the landlord and the tenant, or the assignor. The lease agreement outlines the duties and responsibilities of both parties when it comes to renting the property. Now, when the tenant decides to assign the lease to a third-party, the third-party is known as the assignee. The assignee takes on the responsibilities laid under the original lease agreement between the assignor and the landlord. The landlord must consent to the assignment of the lease prior to the assignment.

For example, Jake is renting a commercial property for his business from Paul for two years beginning January 2013 up until January 2015. In January 2014, Jake suffers a financial crisis and has to close down his business to move to a different city. Jake doesn’t want to continue paying rent on the property as he will not be using it for a year left of the lease. Jake’s friend, John would soon be turning his digital business into a brick-and-mortar store. John has been looking for a space to kick start his venture. Jake can assign his space for the rest of the lease term to John through an assignment of lease. Jake will need to seek the approval of his landlord and then begin the assignment process. Here, Jake will be the assignor who transfers all his lease related duties and responsibilities to John, who will be the assignee.

You can read more on lease agreements here .

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Assignment of Lease From Seller to Buyer

In case of a residential property, a landlord can assign his leases to the new buyer of the building. The landlord will assign the right to collect rent to the buyer. This will allow the buyer to collect any and all rent from existing tenants in that property. This assignment can also include the assignment of security deposits, if the parties agree to it. This type of assignment provides protection to the buyer so they can collect rent on the property.

The assignment of a lease from the seller to a buyer also requires that all tenants are made aware of the sale of the property. The buyer-seller should give proper notice to the tenants along with a notice of assignment of lease signed by both the buyer and the seller. Tenants should also be informed about the contact information of the new landlord and the payment methods to be used to pay rent to the new landlord.

You can read more on buyer-seller lease assignments here .

Get Help with an Assignment of Lease

Do you have any questions about a lease assignment and want to speak to an expert? Post a project today on ContractsCounsel and receive bids from real estate lawyers who specialize in lease assignment.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

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My career interests are to practice Transactional Corporate Law, including Business Start Up, and Mergers and Acquisitions, as well as Real Estate Law, Estate Planning Law, Tax, and Intellectual Property Law. I am currently licensed in Arizona, Pennsylvania and Utah, after having moved to Phoenix from Philadelphia in September 2019. I currently serve as General Counsel for a bioengineering company. I handle everything from their Mergers & Acquisitions, Private Placement Memorandums, and Corporate Structures to Intellectual Property Assignments, to Employment Law and Beach of Contract settlements. Responsibilities include writing and executing agreements, drafting court pleadings, court appearances, mergers and acquisitions, transactional documents, managing expert specialized legal counsel, legal research and anticipating unique legal issues that could impact the Company. Conducted an acquisition of an entire line of intellectual property from a competitor. In regards to other clients, I am primarily focused on transactional law for clients in a variety of industries including, but not limited to, real estate investment, property management, and e-commerce. Work is primarily centered around entity formation and corporate structure, corporate governance agreements, PPMs, opportunity zone tax incentives, and all kinds of business to business agreements. I have also recently gained experience with Estate Planning law, drafting numerous Estate Planning documents for people such as Wills, Powers of Attorney, Healthcare Directives, and Trusts. I was selected to the 2024 Super Lawyers Southwest Rising Stars list. Each year no more than 2.5% of the attorneys in Arizona and New Mexico are selected to the Rising Stars. I am looking to further gain legal experience in these fields of law as well as expand my legal experience assisting business start ups, mergers and acquisitions and also trademark registration and licensing.

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I’m planning on leasing land from a church. Putting a gym on the property. And leasing it back to the school.

lease assignment sa

Ok; first step is that you will need a leasing contract with the church. Ask them to prepare one for you so you would just need an attorney to review the agreement and that should cost less than if you had to be the party to pay a lawyer to draft it from scratch. You need to ensure that the purpose of the lease is clearly stated - that you plan to put a gym on the land so that there are no issues if the church leadership changes. Step 2 - you will need a lease agreement with the school that your leasing it do (hopefully one that is similar to the original one your received from the church). Again, please ensure that all the terms that you discuss and agree to are in the document; including length of time, price and how to resolve disputes if you have one. I hope this is helpful. If you would like me to assist you further, you can contact me on Contracts Counsel and we can discuss a fee for my services. Regards, Donya Ramsay (Gordon)

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What is Assignment of Lease and How It Differs from Subletting

The assignment of lease (and rent) is a foggy topic that is often confused with subletting. Let's clear the air once and all right now. Learn the differences between a lease assignment and sublease so you can make the right choice.

What is Assignment of Lease? - The Important Basics

Let's begin by introducing the 3 players in a lease assignment - The landlord, the original tenant (assignor) and the new tenant (assignee). The original tenant has an unexpired lease agreement with the landlord and he wants out. Since the original tenant can't just break the agreement and walk off, what he does is to get a new tenant to swap places... and take over all his rights and obligations for the remainder of the lease period. So if the original tenant signs a 1 year commercial lease and the business goes bust after 8 months, the new tenant will be assigned a 4-month commercial lease (with the same terms and conditions as the original agreement). Now here's the big catch: Even though the original tenant has handed over all his duties and obligations to the new tenant, he is not off the hook... unless the landlord agrees to release him from all liabilities. If the new tenant stirs up trouble, our dear original tenant will find himself in hot soup as well. Of course, whether the original tenant is allowed to pull this assignment trick out of his hat is a whole new matter. Knowing for sure is actually simpler than most people think: First, examine your local landlord tenant laws for any lease assignment rules. Most of the time, landlords are given the right to allow or disallow assignments but once in a while, the local law let tenants have the final say instead. If there's no mention of lease assignments in your law text, then your rental lease agreement shall dictate the terms.

Difference Between Lease Assignment and Subletting

When it comes to subletting vs assignment of lease, there's often a massive mix-up. Sometimes even real estate professional get it wrong by assuming them to be one and same thing. However if you dig deeper, you will find that the differences are not just numerous, but important as well. Let's begin by dragging the landlord into the picture. An assignment of lease launches the new tenant into a direct relationship with the landlord - The landlord collects rent straight from the new tenant and deals with the new tenant directly on all lease issues. So in this case, the original tenant gets to take back seat and doesn't have to manage the new tenant actively. On the other hand, there's no direct relationship between the landlord and new tenant (subtenant) in a sublease. Instead the original tenant plays mother goose and is responsible for collecting rent from the subtenant and making sure that he's following the lease rules. When you compare the two, a sublease is a lot more hands-on for the original tenant. No matter which path you take, you will still want a good new tenant who pays the rent on time and follows the lease rules to the agreement. For the golden rules on screening tenants and running credit checks, Click here for our guide to running tenant credit checks. When you have a lease assignment, the terms and conditions of the lease remains largely unchanged - It's almost like taking the original lease agreement and swapping the tenant's name with another. With a sublease, there's more breathing space - The original tenant can decide how much rent to charge, how long the subtenant is going to stay or even collect security deposit... as long as it stays within the boundaries drawn by the original lease agreement between the landlord and original tenant.

Should You Choose Assignment of Lease or Sublease?

You are the Landlord - A lease assignment is recommended in most cases. You will have more control over your new tenant (instead of leaving matters in the original tenant's hands and hoping that he would do a good job)... plus you still have the original tenant to cover your back in case anything goes wrong. You are the Original Tenant - Now this is a tricky one. If you want to someone to take over the entire lease and property for its remaining duration (e.g. your business goes belly-up and you no longer need the office), then help yourself to a lease assignment. If the landlord's consent is required for assignment (and he doesn't give the nod), you can always try offering him a lease assignment fee as a deal sweetener. However, if you are looking for someone to share the place (and rent)... or perhaps you need someone to cover the rent while you are overseas for a few short months, then a sublease would be ideal. You are the New Tenant - An assignment of lease works better for you most of the time. You won't be at the mercy of the original tenant (for example if he screws up and the landlord terminates the original lease agreement, your sublease might also go up in flames). But if you only want to rent part of the property... or don't want to tie yourself down for the remaining lease duration, then you are better off sticking to a sublease. Now that we have covered the topic of assignment vs sublease, go ahead and take your pick - Click here for an assignment of lease form or Click here for a sublet agreement instead.

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The Difference Between Cession Delegation and Assignment

HOME / The Difference Between Cession Delegation and Assignment

The Difference Between Cession Delegation and Assignment

We’ve all heard the expressions before: someone is going to cede something to someone else. A supervisor or someone of that position is constantly delegating tasks to someone below themselves, or someone is being given an assignment that requires completion. All of these refer to some kind of a right, or obligation being given to another person. What are each of these and what is it that they do or mean?

The principles of Cession were very well set out by the South African Appellate Division in 1983 during the case of Johnson v Incorporated General Insurance Ltd in which it was held that cession in modern law is an act of transfer: it enables the transfer of a right to take place which is accomplished by way of an agreement to transfer the right. It is entered into between a Cedent and a Cessionary, which arises from a lawful cause in which a Cedent intends to transfer its right to a claim to a Cessionary who intends to become the holder of the right. The Cessionary is then further entitled to cede that right to someone should they choose to do so. This means that any right that Cedent once had is given to the Cessionary who becomes the owner of the right and a Cedent would no longer have any claim to that right.

A very simple example would be the following; lets say that X renders services to Y for an amount of R100. Z owes Y R100 because they lost a bet with one another. In order to make things simple, Y could cede his right to receive payment from Z to X, and X could therefore claim the R100 from Z directly. This has the effect of putting a new creditor into the shoes of the old creditor. However, let’s say that Z does not pay X, and court proceedings ensue. X would no longer be able to claim from Y as Y ceded his right to the R100 from Z to X. Y therefore no longer has the capacity to sue or be sued for that amount, his role would be no more than that of a witness who may testify to that effect.

Delegation, put simply, is the act of giving another person the responsibility of carrying out a performance that you contracted into. Therefore, in the commission of delegation there are 3 persons involved; The delegator (this is the person who actually incurred the obligation to perform), the delegate (this is the person to whom the responsibility of performing the obligation has been given), and finally the person to whom the obligation is due to, this person is known as the obligee.

A very practical example would be the following; A contacts B who owns a well known swimming pool company. A explains to B that his pool is terribly dirty and would like for B to arrange for his pool to be cleaned. B, after obtaining consent from A, then sends an employee, C, to go and clean the swimming pool. The contract was entered into between A and B, however the actual task of fulfilling the obligation was done by C. Should anything go wrong however, for example C accidentally broke the pool light while sweeping; B (as the delegator) would be held liable and accountable by A for any damage caused by C in carrying out what he had been delegated to do.

Assignment is a process which denotes a transfer of both rights and obligations. Christie, in the book The Law of Contract in South Africa, 4th Edition, 2001, describes assignment as the following; “Stepping into another’s shoes involves acquiring his rights , which can be done by cession without the debtors consent, and undertaking his obligations, which can be done by delegation with the creditors consent. Since the lesser is included in the greater it follows that the whole process of substitution cannot take place without the consent of the other Party to the contract.” It therefore combines both cession and delegation.

An example of assignment could be this. You sought out a new business venture and as a result of this you bought a company. This company came with numerous clients and employees. With assignment having taken place, you carry all the rights and responsibilities of an employer as the previous employer has now fallen away.

In the most basic way possible, Cession, Delegation and Assignment could be explained like this;

Cession is the transfer of a right from one person to another, delegation is the transfer of an obligation or duty from one person to another and assignment is a combination of the two.

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Assignment and Consent Standards in Commercial Leases

Mar 6, 2020


Assignment provisions in commercial leases are heavily negotiated and very important to both landlords and tenants. This article presents a brief overview of the assignment provision in commercial leases, both office and retail.

Assignment provisions in commercial leases are heavily negotiated and very important to both landlords and tenants. When a tenant’s interest in a lease is assigned, the tenant is transferring its entire leasehold interest and 100% of the leased premises to a third party for the entire remaining term of the lease. For the tenant, the assignment provision represents a potential exit strategy, dependent of course on the local market, and increased flexibility for future needs. For the landlord, the assignment offers greater security for its revenue stream and hopefully the avoidance of a tenant bankruptcy or default while keeping its building occupied. The tenant’s desire for flexibility and the landlord’s need for control is where the negotiations are focused. This article presents a brief overview of the assignment provision in commercial leases, both office and retail, with particular attention on the laws of Maryland, Virginia and the District of Columbia. The landlord’s standard for providing consent to a request to an assignment will be reviewed, and we will conclude by offering suggested language.

What If The Lease Does Not Contain An Assignment Provision?

The law traditionally favors the free alienation of property. Therefore, under the laws of almost every state, if the lease is silent on whether the landlord’s consent to an assignment is required, then the commercial tenant has the right to assign its interest. This is true in Maryland, Virginia and the District of Columbia. Given this baseline, almost every lease form will have a detailed provision setting forth the assignment process. Note also, however, that in most states it is also enforceable for a commercial lease to have an outright prohibition against assignments. Such a provision would likely be a non-starting deal point for most sophisticated tenants.

What Does Reasonable Mean?

If a lease simply provides that the tenant requires landlord’s consent to an assignment, but does not include the standard for giving or withholding that consent, then in many states the implied standard is that the landlord’s consent may not be unreasonably withheld. Historically this was the minority view, with the historical rule allowing the landlord to withhold consent for any reason. The implied duty of reasonableness is now more the norm as more states adopt this position when presented with the issue. There is express case law establishing this rule in Maryland, and most courts in Virginia and Washington, DC will imply such a covenant of good faith and fair dealing. Most states, though, do allow a landlord the sole right to grant or withhold its consent if the lease clearly expressly provides, and in Maryland the lease must specifically state that the landlord’s consent may be granted or withheld in the sole and absolute subjective discretion of the landlord. Again though, a sophisticated tenant with any leverage should never agree to such a provision.

Most negotiated leases will instead contain a provision requiring that landlord’s consent to an assignment is required, but such consent will not be unreasonably withheld. The tenant will likely also try to include landlord’s obligation to not unreasonably delay or condition its consent. A short clause without further defining what constitutes “reasonableness” generally favors the tenant, and landlords typically prefer including specific standards as to the criteria it can consider when reasonably deciding whether or not to consent to an assignment. Without such specificity, defining “reasonable” is difficult as the landlord and tenant clearly will have differing viewpoints and it may be left as a factual question to be decided in litigation. The typical definition (set forth in the Restatement (Second) of Property) would be that of a reasonably prudent person in the landlord’s position exercising reasonable commercial responsibility.

Absent a detailed provision listing the criteria a landlord can consider when reasonably reviewing a request to assign, a landlord is typically found to be considered reasonable if it considers certain general broad factors. First, the landlord reviews the assignee’s proposed use. In a retail setting, the landlord will be concerned whether the proposed use fits with the existing center and/or violates any existing exclusives or insurance requirements. In an office setting, the landlord might review the expected traffic and wear and tear on the building. Second, the landlord will consider the creditworthiness of the assignee. The landlord (and the assignor) will want to be confident that the assignee is capable of performing tenant’s obligations under the lease and a large creditworthy tenant increases the value of the asset. The assignor might argue that a strict financial test (such as a minimum net worth, for example) is unfair since the assignor is likely not being released upon the assignment and the landlord can still pursue the assignor in the event of a default. Third, the landlord will review the experience and history of the assignor. As mentioned above, landlords instead prefer a detailed list setting forth the many factors that they can include as part of reasonably reviewing a request for a lease assignment.

Without further establishing the criteria, the landlord puts itself at risk of a challenge by the tenant that a denial of a consent is unreasonable.

In defining “reasonable,” courts typically do not allow a landlord to deny or condition consent to an assignment based purely on economic reasons where the landlord results in substantially increasing what it was entitled to under the lease. In Washington, DC, there is well established case law holding that it is unreasonable for a landlord to withhold consent solely to extract an economic concession or improve its economic position. For example, a court would not consider it reasonable for a landlord to condition its consent on the assignee paying a greatly increased rent. Instead, as discussed below, landlords should look to protect their interests in a market of increasing rents by providing for either the sharing of excess rentals or a right to recapture.

What Are Typical Provisions In an Assignment Clause?

As discussed above, tenants generally prefer a short assignment provision simply requiring the landlord to not unreasonably withhold, condition or delay its consent to an assignment. But most leases are drafted by landlords, and over the years the assignment provisions have evolved to contain many typical provisions in addition to further defining “reasonableness,” including the following below.

  • Sharing of Excess Rents. Since many states do not permit a landlord to condition its consent on improving its economic position (e. g. , by increasing the rent), most leases instead contain a provision where the landlord is entitled to all or a portion of the profits. The profits may mean increased rent, or it may even be construed more broadly to consider the value of the location in a sale of the tenant’s business. The landlord’s argument is that it doesn’t want the tenants competing in the real estate market. The tenant should push back here, and certainly try to lower the percentage shared, carve out any consideration received in the sale of tenant’s business, and only share profits after all of the tenant’s reasonable costs incurred in connection with the assignment were first deducted.
  • Corporate Transfers. Since a purchase of the entity constituting tenant is likely not deemed an assignment under the law, most leases make clear that any such corporate sale, including the sale of either a controlling interest in the stock or substantially all of the assets of the tenant, is deemed an assignment for purposes of the lease. The tenant should carve out permitted transfers for typical mergers and acquisitions under certain conditions, and also carve out routine transfers of stock (or other ownership interests) between existing partners or for estate planning purposes. The landlord will likely accept a permitted transfer concept provided they receive adequate notice and the successor entity succeeds to all of the assets of the original tenant with an acceptable net worth.
  • Assignment Review Fee. Most landlords include in their form lease the requirement that the tenant reimburse them for legal and administrative expenses incurred in reviewing the request for consent and preparing the assignment. The tenant clearly wants to keep these fees reasonable and in keeping with the local market.
  • Recapture Rights. Landlords like to include the express right to recapture the premises in the event the tenant comes to it to request a consent for an assignment. A recapture clause allows the landlord to terminate the lease if market rents have increased or if it needs the space for another use. Sophisticated tenants should push back here as much as leverage allows, try to limit the time periods, and if nothing else try for the right to nullify the recapture by rescinding its request for the consent.
  • Tenant’s Remedy. To protect themselves from claims for damages from the tenant if the landlord withholds its consent to a requested assignment, landlords often include a provision where the tenant waives its rights to monetary damages in such a situation and can only seek injunctive relief. The tenant should try to delete this provision, or at least, if leverage permits, provide for the right to seek damages if the landlord is subsequently found to have acted in bad faith.

Assignment provisions are heavily negotiated and both the commercial landlord and tenant need to be advised to the applicable local law and know the market for a comparable transaction. ( Note: The author represents office and retail landlords and tenants throughout Virginia, Maryland and the District of Columbia.) Sample reasonableness provisions for both office and retail uses are copied below for reference.

Retail Lease

Landlord and Tenant agree, by way of example and without limitation, that it shall be reasonable for Landlord to withhold its consent if any of the following situations exist or may exist: (i) In Landlord’s reasonable business judgment, the proposed assignee lacks sufficient business experience to operate a business of the type permitted under this Lease and to a quality required under this Lease; (ii) The present net worth of the proposed assignee is lower than that of Tenant’s as of either the date of the proposed assignment or the date of this Lease; (iii) The proposed assignment would require alterations to the Premises affecting the Building’s systems or structure; (iv) The proposed assignment would require modification to the terms of this Lease, or would breach any covenant of Landlord in any other lease, insurance policy, financing agreement or other agreement relating to the Shopping Center, including, without limitation, covenants respecting radius, location, use and/or exclusivity; (v) The proposed assignment would conflict with the primary use of any existing tenant in the Shopping Center or any recorded instrument to which the Shopping Center is bound; and/or (vi) The proposed assignment or subletting would result in a reduction in the Rent collected by Landlord during any portion of the term of this Lease.

Office Lease

Without limitation as to other reasonable grounds for withholding consent, the parties hereby agree that it shall be reasonable under this Lease and under any applicable law for Landlord to withhold consent to any proposed Transfer where one or more of the following apply: (i) The Transferee is of a character or reputation or engaged in a business which is not consistent with the quality of the Building; (ii) The Transferee intends to use the Premises for purposes which are not permitted under this Lease; (iii) The Transferee is a governmental agency; (iv) The Transfer occurs prior to the first anniversary of the Lease Commencement Date; (v) The Transferee has a net worth of less than $10,000,000.00; (vi) The proposed Transfer would cause a violation or trigger a termination right of another lease for space in the Building; or (vii) Either the proposed Transferee, or any person or entity which directly or indirectly, controls, is controlled by, or is under common control with, the proposed Transferee, (i) occupies space in the Building at the time of the request for consent, or (ii) is negotiating with Landlord to lease space in the Building at such time, or (iii) has negotiated with Landlord during the six (6)-month period immediately preceding the Transfer Notice.

Reprinted with permission from the March edition of the Commercial Leasing Law & Strategy© 2020 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or [email protected] .

  • John G. Kelly

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