Over the past year, Clubs SA has received a notable increase in the number of members advising that they were having issues with their leases, finding that costs have become unsustainable and assumptions they made in relation to the lease were incorrect. 

It is vitally important that before a club enters into a lease with council, or other entity, they properly look over and understand the terms of the lease.  

Proper due diligence must be undertaken to understand the costs of the lease and whether these are sustainable.  

Under the Associations Incorporation Act 1985 (SA), committee members have a duty to act with reasonable care and diligence in the exercise of their powers and the discharge of their duties.   

This includes the signing of leases and similar. 

When looking at a lease, some of the main things to consider are: 

• What is the length of any lease being offered and will this provide sufficient security and ability to forward plan?  Who decides on whether the lease is extended or not? 

• What terms does it set for rent increases/reviews and are these realistic and attainable? 

• Who is responsible for what costs and maintenance and is this in line with what is generally accepted for a lessee and lessor? 

• Would the club receive any concessions/reductions in exchange for being a not-for-profit and for meeting certain requirements? 

• In the case of multi-club facilities, are there other clubs on the premises to help contribute towards the rent amount and do you know whether they would pay more or less? 

• Is any rent amount currently or likely to be a significant amount of bar and/or food profit that you receive each year and therefore increase risks of cost blowouts? 

• Is it sufficiently clear on insurance requirements? 

• What does it say about the ability for any improvements or alterations to be made to the premises and are these overly restrictive? 

• Does it say anything specific in terms of operating hours? 

• Does it contain the ability to outsource the facility (for a fee) for functions etc? 

As well as understanding costs and restrictions, it is vitally important for a club to emphasise that they are a not for profit operating for the benefit of the local community.  

Additionally, the mental, physical and social benefits from the club operating within the community are enormous, also saving the council significant costs. 

Clubs also help to reduce operating costs significantly by the use of the generous hours put in by their volunteers and should someone such as council directly take over premises, the costs will be greatly increased.  

Clubs SA is unable to provide legal advice, however should a club wish to obtain this advice, then we can recommend our partner law firm HWL Ebsworth Lawyers.  

Receiving legal advice regarding the terms of a lease is often much more worthwhile prior to signing and entering into the agreement.   

Clubs can also view a club lease checklist which is available on the Club Governance page on Clubs SA’s members only site.