Entering into a Commercial Lease for SDA Houses

In Short

• Ensure the lease permits operating a SDA house and complies with all relevant laws, including disability standards, building codes, and fire safety.
• Understand your obligations and the lessor's responsibilities for repairs, maintenance, NDIA enrolment, insurance, and accessibility requirements.
• Review lease terms on rent, subletting, assignment, early termination, and dispute resolution, and seek legal advice before signing.

Tips for Businesses

When leasing a property for a SDA house, carefully check that the permitted use allows your operations and that you comply with all regulatory requirements. Clearly define responsibilities for maintenance, insurance, and NDIA enrolment. Review provisions for rent, assignment, and termination, and have a lawyer experienced in commercial leasing check the lease before you commit.

When leasing commercial properties to operate Specialist Disability Accommodation (SDA) houses, you should exercise due diligence and carefully review the lease agreement terms to protect your interests.

It is important to understand the key parties typically involved in SDA arrangements:

• Landlord:  who owns the SDA house.
• SDA Provider:  who owns or leases the house from the landlord and holds registration to provide SDA services.
• SIL Provider: who delivers the support services to residents (may be the same entity as the SDA Provider).
• Participants/Residents: the people living in SDA houses.

Where the SDA Provider is also a tenant, it is essential to understand the unique requirements and obligations associated with operating a SDA home. In this article, we will explore the key considerations that you should keep in mind when entering into a commercial lease for an SDA property.

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Permitted Use and Compliance with Regulations

One of the first things to check is whether the permitted use under the lease allows for the operation of a SDA house and the provision of disability accommodation services. It is essential to ensure that the law or lease explicitly permits the intended use to avoid any potential breaches or disputes.

Additionally, review the lease to understand your obligations regarding compliance with relevant laws and regulations, such as:

• disability services standards;
• building codes; and 
• fire safety requirements.

Term of the Lease and Rental Considerations

The term of the lease is a critical factor to consider, as it will determine the duration of your occupancy and operation of the SDA house. You should carefully evaluate the initial term and any renewal options to ensure they align with your intended plans.  In Victoria, it is particularly important to ensure that the headlease has sufficient flexibility to allow the landlord to meet their obligations under the Residential Tenancies Act 1997 (VIC).

Rent and outgoings are also crucial considerations, as you must review the: 

• rent; 
• rent review mechanisms; and 
• the outgoings (e.g., council rates, utilities, repair and maintenance) that you will be responsible for paying.

Tenant's and Lessor's Obligations

You should thoroughly understand your obligations regarding repairs, maintenance, alterations, and any specific requirements related to operating a SDA house. A critical initial consideration is determining who is responsible for enrolling the dwelling with the NDIA and relevant state authorities and maintaining that enrollment, as you must enrol SDA houses with the NDIA for them to operate. It is equally important to review the lessor's obligations for structural repairs, capital expenditure, and any services or facilities they must provide. This will help you identify potential areas of concern and clearly define and understand those responsibilities.

Insurance and Accessibility

Insurance requirements are another critical aspect to consider. You should check the insurance requirements for yourself and the lessor, including public liability, plate glass, and building contents insurance. Additionally, it is essential to ensure that the premises meet the necessary accessibility standards and requirements for operating an SDA house, as this can have significant implications for the safety, health and overall well-being of participants and residents.

Subletting, Assignment, and Early Termination

Depending on your long-term plans, it may be important to consider whether the lease permits subletting or assignment. This could be relevant if you wish to  transfer the lease agreement to another registered SDA provider. It is important to note that you cannot bring in additional service providers to run the SDA house, as a registered SDA provider must operate it. Similarly, understanding the provisions for early termination of the lease is crucial for you to have a clear exit strategy if required.

Dispute Resolution and Legal Remedies

Commercial leases often include provisions for dispute resolution, such as mediation or arbitration, in the event of disagreements or conflicts between the tenant and the lessor. You should familiarise yourself with these clauses and understand the processes and potential legal remedies available to you in case of breaches or disputes. Additionally, it is advisable to seek legal advice from a lawyer experienced in commercial leasing to ensure that the lease terms are fair, enforceable, and protect your interests.

Legal Review and Advice

Given the complexity and lack of statutory requirements for commercial leases, particularly for specialised properties like SDA houses, it is advisable for you to seek legal advice from a lawyer experienced in leasing laws in each state and territory.

Key Takeaways

Overall, leasing commercial properties as Specialist Disability Accommodation houses requires careful consideration of various factors, including permitted use, compliance with regulations, lease term, rental considerations, tenant and lessor obligations, insurance, accessibility, subletting and assignment provisions, and early termination clauses. 

By thoroughly evaluating these aspects and seeking professional legal advice, you can make conscious and informed decisions, enter into commercial leases with confidence, and ensure the smooth operation of your SDA house for participants.

If you require a commercial lease for a SDA house to be prepared with terms favourable to your requirements, or if you would like a commercial lease for an SDA house reviewed to ensure the terms are balanced between the parties, 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.

Frequently Asked Questions

Do I need to be a registered SDA provider to lease and operate an SDA house?

Yes. Only registered SDA providers can operate and manage SDA properties. If you plan to use the property as a SDA house, you must ensure your business is registered with the NDIA and complies with all relevant requirements under the NDIS.

What should I check in a commercial lease for an SDA house?

Check that the permitted use includes operating a SDA home. Review your responsibilities for NDIA enrolment, compliance with disability standards, maintenance obligations, insurance, and any clauses related to early termination, subletting or assignment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.