A commercial lease can lock a business into significant costs for years. Whether you are a landlord or a tenant, these are the areas that most often cause disputes.

Term and renewals

Check the initial term, the number and length of rights of renewal, and the process (and deadlines) for exercising them. Missing a renewal date can lose a valuable right.

Rent and rent reviews

  • How is rent reviewed: market, CPI, fixed percentage, or a mix?
  • Is there a “ratchet” clause that prevents rent from going down?
  • What is the process for deciding market rent if the parties disagree?

Outgoings and GST

Understand what the tenant pays on top of rent: rates, insurance, body corporate levies, building management costs and so on. Rent and outgoings are usually exclusive of GST.

Permitted use and compliance

Confirm the permitted use matches your business, that zoning allows it, and who is responsible for building compliance, fire safety and earthquake-prone building requirements.

Fit-out, make-good and reinstatement

Many tenants are surprised by end-of-lease obligations. Clarify what must be removed and restored, and what happens to fit-out and incentives paid at the start of the lease.

Assignment, subletting and sale of the business

If you may sell your business, check how and when the lease can be assigned and whether the landlord can withhold consent, and whether you stay liable after assignment.

Guarantees and security

Landlords often ask for personal guarantees or a bond. Understand how long a guarantee lasts and whether it covers renewals and rent increases.

Default and termination

Review notice periods, remedy periods and the landlord's rights if rent is late. The Property Law Act 2007 sets procedures for cancellation that affect how these clauses operate.

Registration

A lease with a term (including renewals) of more than three years should generally be registered against the landlord's title to protect the tenant's interest.

We act for both landlords and tenants and can negotiate improvements before you sign.

General information only, not legal advice.