Underlease (L2)

An underlease is a lease granted by a lessee (the underlessor) out of their own lease, to an underlessee. Land Services SA's Form L2 is the approved form for an underlease of a registered or contemporaneously lodged head lease; a lease of a Crown lease is done on Form L1 instead. The underlease must expire before the head lease. Under section 118 of the Real Property Act 1886 (SA), a lease is not binding on a mortgagee or encumbrancee who did not consent in writing before registration, and the guidance notes apply this to underleases. A registered underlease is also protected on a later surrender of the head lease, because every surrender is subject to any registered underlease (s 123). The certifications required by section 273 apply.

When you need it

• A registered lessee is subletting the whole or part of the leased premises and wants the underlease registered.
• The head lease is lodged at the same time and is not yet registered (identify it by its parties and date).
• Use Form L1 for a lease from the registered proprietor, or a lease of a Crown lease.

1. 1

   Lease being underleased

   Identify the head lease by its registered number. If it is not registered yet, describe it by parties and date, for example 'Lease dated ... from A to B lodged contemporaneously herewith'.

2. 2

   Land description

   State whether the underlease covers the whole or part of the land in the head lease, for example 'Whole of the land in CT Volume ... Folio ...' or 'Shop 4 in FP ... being portion of the land in CT Volume ... Folio ...'.

3. 3

   Underlessor and underlessee

   Give the underlessor's full name and current address. If their name has changed, lodge an Application to Note Change/Correction of Name before the underlease. Give the underlessee's full name, address and mode of holding where appropriate.

4. 4

   Term and rent

   Insert a certain commencement date and a certain expiry date, which must be before the head lease expires. Insert the rent and manner of payment.

5. 5

   Operative clause and covenants

   Strike through the inapplicable words about where the covenants are: set out in the underlease on attached insert sheets, or in a deposited memorandum, in which case insert its number.

6. 6

   Consents, date and certification

   Attach any mortgagee or encumbrancee consents. Date the form and complete the underlessor and underlessee certifications, deleting those that do not apply. Self-represented parties make only the two certifications about retaining evidence and correctness. An attorney or a body corporate cannot certify.

• Underleases (prefix UL) executed on or after 3 August 2020 must be lodged electronically through an Electronic Lodgement Network Operator, unless an exemption applies. One listed exemption is where the head lease is unregistered and is to be lodged in series.
• A paper channel remains for self-represented parties and exempt dealings, lodged with Land Services SA. Members of the public use the Face to Face service.
• The Registrar-General's Verification of Identity and Verification of Authority requirements must be complied with, according to the guidance notes.
• A registration fee applies. Check Land Services SA's current fee schedule. Use a Form B1 annexure sheet if you run out of space in a panel.

• Development approval may be needed to underlease part of an allotment (Planning, Development and Infrastructure Act 2016 ss 101 and 131). The certifier is responsible for this.
• The underlease takes effect subject to prior registered interests, such as a mortgage of the head lease or a permissive caveat.
• Check the head lease itself: it may require the lessor's consent before any subletting.