If you own commercial property, you might be considering leasing it out to other people. Whether it be an office space or a warehouse, you can easily find a business who may want to rent your property for commercial activities. 

However, being under a lease comes with several obligations (for all parties involved). After all, you’re allowing someone else to use your property. Accordingly, you’d want to set some ground rules around what they can and can’t do, and what obligations they have to maintain a good working relationship with you. 

If you’re an SMSF that owns commercial property, you want to draft a strong Commercial Lease Agreement that ensures you’re well protected and is compliant with the relevant superannuation rules. 

Can An SMSF Lease Commercial Property To Its Members?

The simple answer here is yes, however there are a number of rules that you need to comply with if you choose to do this. For example, you need to make sure that your Agreement with your member is similar to an Agreement you would have with an unrelated party (a non-member). 

So, you want to be objective here. Your agreement should look like a regular commercial lease agreement. 

Generally speaking, SMSFs aren’t allowed to lease real property to members of the fund, or other related parties (for example, family members). The exception to this rule is if the premises is being used ‘wholly and exclusively’ in a business. In other words, you cannot be using the premises for personal use. 

There are a lot of requirements SMSFs need to be aware of when drafting a Commercial Lease Agreement with their tenants, so it’s worth speaking to a lawyer who can ensure you’re legally covered. 

What Does A Commercial Lease Agreement Cover For An SMSF?

Generally, a Commercial Lease Agreement will cover the following things:

  • How long the lease will be
  • Whether there will be review of rent payments
  • Costs
  • Limitations to the use of the premises
  • Who will be responsible for repair and maintenance 
  • Rules around assignment and subleasing 
  • How the lease can be terminated
  • Other relevant responsibilities of the landlord and tenant 

It’s important to have a lawyer help you draft a Commercial Lease Agreement for your SMSF as there are superannuation rules you need to comply with. 

Need Help?

As the landlord (SMSF), you want to make sure that you’re well protected if you’re leasing property to others. Your Agreement should also be compliant with superannuation rules, which is why it’s a good idea to speak to a lawyer first. 

If you would like a consultation on your options going forward, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

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