Articles · Commercial and Retail Leasing · South Australia
Author: Manal Amro, Principal Solicitor, PA Law Pty Ltd
Last reviewed:
An offer to lease in South Australia can create legal commitments before the formal lease is signed. Its effect depends on the wording, the terms agreed and the surrounding circumstances. Before signing, check the rent, lease term, outgoings, repairs, permitted use, personal guarantees and your options if the business needs to leave.
You have found premises that suit your business. The agent sends a short document and asks you to sign so the lease can be prepared. It is tempting to treat that step as routine, especially when you are already planning your fit-out and opening date.
However, a short document can have lasting consequences. This article expands on PA Law’s offer to lease video guide and sets out questions to resolve before committing to business premises in Gawler, Adelaide or elsewhere in South Australia.
Is an offer to lease in South Australia legally binding?
It can be. Calling a document an “offer”, “proposal” or “heads of agreement” does not, by itself, settle whether it is binding. The whole document and the dealings between the parties need to be assessed.
Important questions include whether the parties intended to commit immediately, whether essential terms were settled, and whether the arrangement was conditional on a later event. A reference to a formal lease being prepared does not necessarily mean that all obligations are postponed until that lease is signed.
For that reason, ask your solicitor to review the offer to lease before you sign or indicate acceptance. The Small Business Commission SA’s leasing guide also cautions prospective tenants against accepting terms or signing documents before obtaining their own legal advice.
What should you check before signing an offer to lease?
Use these seven checks to identify questions for your solicitor and the leasing agent. Ask for clear written answers and ensure any negotiated changes appear consistently in the relevant documents.
1. Rent, increases and the real cost of occupation
Confirm the starting rent, whether GST is additional, when payments begin and how rent reviews operate. Ask whether increases are fixed, linked to an index or assessed against market rent, and when each method applies.
Also clarify any rent-free period or incentive. Does it cover base rent only? Are outgoings still payable? Does the incentive have conditions or repayment obligations? Prepare a budget that allows for the proposed increases and the costs of opening, rather than relying only on the first month’s rent.
2. Lease term, renewal options and key dates
Check the commencement and expiry dates, the initial term and each proposed renewal option. An option should be reviewed together with its notice requirements, conditions and the rent arrangements for the further term.
Ask how the dates fit with access for fit-out, approvals and the planned opening. If you need time to build a customer base or recover fit-out costs, explain that when discussing the proposed term. Your solicitor should also assess any statutory minimum-term requirements and relevant exceptions.
3. Outgoings and additional charges
Base rent may be only part of the financial commitment. Ask for a breakdown of proposed outgoings, the method used to allocate shared expenses and current estimates.
Depending on the proposal, questions may concern insurance, council charges, common-area expenses, utilities, management charges or marketing contributions. These are matters to investigate, not a statement that every charge is recoverable. Ask your solicitor which costs can lawfully be passed on under the applicable leasing rules.
4. Repairs, maintenance, fit-out and make-good
Identify who is responsible for repairs, routine servicing, replacement equipment and structural issues. For example, what happens if an ageing air-conditioning system fails shortly after occupation?
Record the starting condition with photographs and a condition report. Confirm who owns existing fixtures, which fit-out works require approval and what must be removed or reinstated when the tenancy ends. Our commercial lease make-good guide explains why returning the keys may not complete your obligations.
5. Permitted use and required approvals
Check that the permitted-use clause covers the activities you intend to conduct. Describe the business accurately, including any food preparation, retail sales, professional services, outdoor seating or other planned use.
The lease wording should be considered alongside planning, licensing and other approvals. Ask who will obtain them, who pays, and what happens if approval is refused or delayed. If an approval is essential, seek advice about an appropriate condition before signing the offer to lease.
6. The tenant’s identity, guarantees and security
Confirm the correct person or entity is named as tenant and the capacity in which each person signs. If a company or trustee is involved, have those details checked before the documents are finalised.
A personal guarantee may expose the guarantor to liability for the tenant’s obligations. Ask about its scope, any proposed limit, whether it covers renewals or variations, and how a release can be obtained. Review any bond or bank guarantee separately, including its amount and the conditions for its return.
7. Leaving early, selling or transferring the business
Ask what happens if the premises no longer suit the business, the business is sold or trading becomes unviable. Review any break clause, assignment provisions, consent requirements and possible continuing liability.
Do not assume that finding a replacement tenant, closing the doors or handing back the keys automatically releases you or a guarantor. These issues are easier to assess when you understand the proposed terms before making the commitment.
Which documents should you receive before entering the lease?
For a new lease covered by the Retail and Commercial Leases Act 1995 (SA), the documentation requirements include a proposed lease, the Commission’s information brochure and a disclosure statement. Confirm first whether the Act applies; the description “commercial” does not answer that question.
Section 11 generally requires the proposed lease when negotiations begin, with the Commission’s information brochure supplied at the same time. Section 12 requires a disclosure statement signed by or for the landlord before the lease is entered into. These particular requirements do not apply to renewals.
Read the offer to lease, proposed lease, disclosure statement and any incentive or fit-out agreement together. Raise differences before committing. See sections 11–12 of the Act and the Commission’s guidance on preparing to sign a commercial lease.
A practical example: the café that cannot open on time
Hypothetical example: A café operator signs an offer to lease specifying a rent commencement date. The operator expects several weeks to obtain approvals and complete a fit-out, but the documents do not clearly address those assumptions.
The questions are immediate: is early access available, who must complete the works, and what happens to rent if approval takes longer than expected? The outcome depends on the documents and applicable law. Before signing, the operator should have those issues addressed expressly and obtain advice about suitable conditions.
The same exercise can help an office, salon or professional practice: write down what must happen before you can trade, then compare that list with the proposed agreement.
What should you do if you have already signed an offer to lease?
Get advice promptly before attempting to withdraw or renegotiate. Whether you can change course depends on what you agreed, any conditions and the relevant circumstances.
- Keep the complete record: save the signed offer, attachments, draft lease, disclosure statement, advertisements and correspondence.
- Write down the timeline: note when you signed, what was said, whether acceptance was communicated, and any payments or access arrangements.
- Identify urgent dates: flag conditions, signing deadlines, handover, rent commencement and proposed fit-out work.
- Have the position assessed: obtain advice before sending a withdrawal notice or taking further steps that may affect your rights.
A missing or materially misleading disclosure statement may give rise to remedies under section 12, but it does not automatically cancel the lease. A solicitor should assess the available remedies and the proper process.
Frequently asked questions about an offer to lease
Is an offer to lease the same as the final lease?
No. An offer commonly records proposed commercial terms, while the formal lease contains more detailed obligations. However, the earlier document can itself create commitments. Both should be reviewed together.
Does “subject to lease” mean I can withdraw?
Not necessarily. The effect of those words depends on the complete wording and circumstances. Ask your solicitor whether the document postpones legal commitment or only anticipates a more detailed document.
Can I negotiate the offer to lease?
You can propose changes before accepting, although the landlord may not agree. Identify the terms your business needs, including approvals, costs, access and exit arrangements, and have any agreed changes properly documented.
Can an offer to lease include a personal guarantee?
Yes, a proposed arrangement may require a guarantee or a commitment to provide one. Check the offer, attachments and proposed lease. Anyone asked to guarantee the tenant’s obligations should understand the personal exposure before signing.
Should I wait until the formal lease arrives to obtain legal advice?
No. Arrange a review of the offer to lease before signing or accepting its terms. If you have already signed, provide that document and the surrounding correspondence promptly so your position can be assessed.
Watch Manal Amro’s offer to lease video
Watch on YouTube or read the video transcript.
Need an offer to lease reviewed in South Australia?
PA Law assists business owners in Gawler, Evanston South, Adelaide and across South Australia with commercial and retail leasing documents. We can review the proposed terms, explain your obligations and identify changes to discuss before you commit.
When you enquire, provide the offer to lease, any draft lease and disclosure statement, the intended business use and your signing deadline. Confirm availability and the proposed scope of work directly.
Request a leasing document review or call 0431 614 696. Learn more about our commercial leasing services.
About the author: Manal Amro is Principal Solicitor of PA Law Pty Ltd. She assists clients with property, commercial, wills and estates matters.
General information only, not legal advice. Whether an offer is binding and which statutory protections apply depend on your documents and circumstances. Obtain advice tailored to your matter before acting.