Can a Landlord Terminate a Commercial Lease in Australia?

If you run a business from a shopfront, office, warehouse, clinic or studio, your commercial lease is more than paperwork - it’s the foundation your operations sit on.

That’s why having your landlord attempt a commercial lease termination can feel like the ground shifting underneath you. You might be worried about losing your premises, paying out the rest of the lease, your fit-out, your customer foot traffic, and whether you can be locked out without warning.

The good news is: in Australia, landlords usually can’t just terminate a commercial lease on a whim. Most leases only allow termination in specific circumstances, and there are often notice requirements, “remedy” periods, and other steps the landlord must follow. The not-so-good news is that the details matter, and the outcome depends heavily on your lease terms, the facts on the ground, and (in many cases) the state or territory laws that apply to your premises.

Below, we break down when a landlord can terminate a commercial lease, how the process typically works, what to do if you receive a breach notice or termination notice, and how to protect your business before problems arise.

What Does “Commercial Lease Termination By Landlord” Actually Mean?

Commercial lease termination by landlord means your landlord is seeking to end the lease before its natural expiry date (or end of term), usually relying on a clause in the lease or a legal right that arises after a breach.

In practical terms, termination can mean:

• you must vacate the premises by a certain date;
• you may be locked out (in some circumstances);
• your right to trade from the premises ends; and
• the landlord may claim money from you (for example, unpaid rent and other losses).

A key point: not every dispute equals termination. Sometimes a landlord issues a breach notice to pressure you to pay, fix a problem, or comply with a lease clause - but termination may only be the next step if the breach isn’t remedied (or can’t be remedied).

Commercial Vs Retail Leases

Some commercial premises are covered by state/territory retail leasing laws (for example, retail shops in shopping centres), while others aren’t (for example, many warehouses or industrial premises).

Retail leasing rules can affect things like disclosure, certain landlord costs, and dispute processes. But even where retail leasing legislation applies, termination typically still depends on the lease terms, the nature of the breach, and any additional requirements under the relevant state or territory regime.

If you’re not sure whether your lease is a “retail lease” or not, it’s worth getting advice early - it can change your options and the steps you need to take.

When Can A Landlord Terminate A Commercial Lease In Australia?

Most leases give landlords termination rights if the tenant breaches the lease in a serious way, or if certain “trigger events” occur.

Common grounds for commercial lease termination by landlord include the following.

1. Non-Payment Of Rent (And Other Money Owing)

The most common trigger is rent arrears. Commercial leases usually require you to pay:

• base rent;
• outgoings (like rates, utilities, cleaning, security, or centre management fees);
• GST (where applicable); and
• interest on late payments (if the lease allows it).

Depending on the lease (and sometimes the applicable state or territory legislation), the landlord may need to issue a written notice giving you time to pay before termination rights arise.

2. Breach Of Other Lease Obligations

A landlord may seek termination if you breach other important terms, such as:

• using the premises outside the permitted use (for example, operating a different type of business);
• unauthorised alterations or fit-out works;
• failing to repair or maintain the premises (where the lease makes you responsible);
• causing nuisance to other tenants (noise, odours, waste disposal issues);
• subleasing or assigning without consent; or
• not keeping required insurances in place.

Some breaches are “capable of remedy” (meaning you can fix them). Others aren’t (for example, an unauthorised sublease that has already occurred may be hard to unwind). That distinction matters because it often affects whether the landlord must give you an opportunity to fix the issue.

3. Insolvency Events

Leases often include an “insolvency” clause. This can give the landlord rights if, for example, the tenant goes into liquidation, voluntary administration, or bankruptcy (for individuals/sole traders).

These situations can be legally and commercially complex, especially if you’re trying to restructure the business while keeping the premises.

4. Abandonment Or Failure To Trade

Some leases (especially in shopping centres) require you to “continuously trade” during certain hours. If you close for extended periods, the landlord may argue you’re in breach.

Even without a continuous trading clause, if you abandon the premises (for example, leaving it vacant and not responding), a landlord may take steps to treat that as a default and seek to regain possession in accordance with the lease and any legal requirements that apply.

5. End Of Term (Non-Renewal Is Not “Termination”)

Sometimes business owners talk about “termination” when the lease simply ends and the landlord chooses not to renew.

That’s different from termination for breach. If your lease is ending and you’re trying to plan your next move, it’s still worth checking your notice obligations and any holdover or “month-to-month” terms that might kick in.

How Does A Landlord Terminate A Commercial Lease? The Usual Process

Every lease is different, and the process can vary depending on the lease terms and whether retail leasing legislation (and any prescribed forms or dispute steps) applies in your state or territory. But many commercial lease terminations follow a similar pattern. Understanding the usual steps helps you spot when something is being done incorrectly - and helps you respond in a way that protects your position.

Step 1: The Landlord Identifies A Breach

The landlord (or their agent/centre management) forms the view that you’ve breached the lease.

This might be based on missed payments, complaints from other tenants, an inspection, or a failure to provide documents (like insurance certificates).

Step 2: A Breach Notice Is Issued (Often With A Remedy Period)

Many leases require a written breach notice before the landlord can terminate. Depending on the lease and the jurisdiction, the notice may need to:

• specify the breach;
• require you to remedy the breach (if possible); and
• give you a timeframe to remedy it (for example, 7 or 14 days).

If the landlord skips this step (where the lease or applicable law requires it), the termination may be challengeable.

Step 3: Termination Notice / Re-Entry Steps

If the breach is not remedied within the required timeframe (or the breach is not capable of remedy), the landlord may issue a termination notice and/or take steps to regain possession as permitted by the lease and law.

Some leases use the language of “re-entry” (the landlord taking possession again). Others just refer to termination and requiring you to vacate.

Important: Physically excluding a tenant from premises (including changing locks) can carry serious legal risk if it’s not done strictly in accordance with the lease and any court process or statutory requirements that apply. If you’re threatened with an immediate lockout, get advice urgently before the situation escalates.

Step 4: Claims For Money Owing

Even after termination, the dispute might continue. The landlord may claim:

• unpaid rent/outgoings up to the termination date;
• make-good costs (restoring the premises);
• loss of rent until a new tenant is found; and
• legal costs (where the lease permits it).

This is one reason it’s often better to respond early to a breach notice - even if you disagree with it - rather than letting it progress to termination.

What Should You Do If You Receive A Breach Notice Or Termination Notice?

If you receive a notice from your landlord (or their lawyer/agent), it’s easy to panic. But your next steps can make a big difference.

Here’s a practical approach you can take.

1. Don’t Ignore It (Even If You Think It’s Unfair)

Silence is often interpreted as refusal or inability to comply. If there’s a remedy period, it may expire while you’re deciding what to do.

Even if you’re disputing the claim, you should still respond in writing and keep the tone professional.

2. Check The Lease Clause They’re Relying On

Look for clauses covering:

• defaults/breaches and notices;
• timeframes to remedy;
• interest and recovery of costs;
• re-entry and termination rights;
• dispute resolution;
• make-good obligations;
• assignment/subleasing and landlord consent; and
• any personal guarantees or security (bank guarantee/cash bond).

If you’re unsure what the clause means in plain English, it’s worth getting the lease reviewed. A small wording change can completely change the landlord’s rights and your exposure.

For many businesses, it’s worth having a Commercial Lease Review done early (ideally at the start of the lease), so you know what the “default” and termination triggers are before there’s a dispute.

3. Work Out Whether The Breach Is “Capable Of Remedy”

This is a practical question: can you fix it, and how quickly?

• If it’s rent arrears, can you pay immediately or agree on a payment plan?
• If it’s a permitted use issue, can you adjust operations or seek consent?
• If it’s an unauthorised fit-out, can you obtain retrospective consent?
• If it’s insurance, can you provide evidence right away?

Where the breach can be remedied, you’ll often be in a stronger position if you can show you’ve acted quickly and reasonably.

4. Gather Evidence And Put Everything In Writing

Collect and organise:

• the lease and any side letters/variations;
• rent ledger and bank records showing payments;
• emails with the agent/landlord;
• photos of the premises (if condition is disputed); and
• any notices received and your responses.

A clear paper trail is extremely helpful if the dispute escalates.

5. Negotiate Early (But Don’t Accidentally Admit Liability)

Many commercial lease disputes can be resolved commercially - for example:

• a short rent deferral or payment plan;
• an agreed surrender date to avoid forced termination;
• reducing the space or renegotiating trading hours; or
• assignment to a new tenant (with landlord consent).

But wording matters. You don’t want to accidentally confirm a breach you dispute, or agree to something that increases your liability. If the situation is tense or high-stakes, it’s a good time to bring a lawyer in to help manage communications.

Can You Challenge A Commercial Lease Termination By Landlord?

Sometimes, yes - especially where the landlord hasn’t followed the lease process, hasn’t served a valid notice, or is relying on termination rights that don’t actually apply (including because additional requirements apply under retail leasing legislation in your state or territory).

Common issues we see include:

• incorrect notices (wrong entity name, wrong address for service, missing required information);
• not giving the required remedy period (or not allowing a reasonable chance to fix the breach);
• terminating for a minor breach where the lease requires the breach to be “material” or “substantial”;
• waiver/acceptance issues (for example, landlord continues to accept rent after alleged termination); and
• misunderstanding the permitted use or other key obligations.

That said, challenging termination can be time-sensitive. If your premises access is at risk, the priority is often to stabilise the situation first (for example, by negotiating access, preserving stock, or agreeing on interim arrangements), then tackle the legal dispute.

If you’re trying to end the lease yourself - or the landlord claims you’ve ended it - the concepts of termination and rescission can get confused. It can help to understand the difference between rescission vs termination, because the legal consequences (including costs and liabilities) can be very different.

What If The Landlord Wants You Out For Commercial Reasons?

Landlords sometimes want a tenant out because:

• they want to redevelop the site;
• they think they can get a higher rent from someone else;
• they want a different tenant mix; or
• there’s a dispute unrelated to an actual lease breach.

Generally, they still need a legitimate legal pathway to terminate early. If they can’t point to a valid termination trigger under the lease (or the law), they may instead try to negotiate an exit with you (sometimes with incentives).

If you’re offered an “early exit deal”, treat it seriously. This is where having the right paperwork matters - for example, a deed of surrender or settlement deed that clearly deals with money, make-good, handover of keys, and release of claims.

How To Reduce Your Risk Before Things Go Wrong (Practical Prevention Tips)

The best time to protect your business from commercial lease termination by landlord is before a dispute arises - ideally at negotiation stage, and then through good lease management.

1. Get The Lease Terms Right Before You Sign

Many disputes come down to one or two clauses that a tenant didn’t realise were high-risk.

When you’re negotiating, pay close attention to:

• default clauses and short remedy periods;
• what counts as a “breach” and whether the landlord can terminate for minor breaches;
• personal guarantees (and whether you can limit them);
• make-good obligations (these can be expensive);
• rent review mechanisms;
• outgoings (what you do and don’t pay); and
• assignment/subleasing rights (important if you might sell the business).

If your lease is being renewed or varied, it can be worth reviewing those changes carefully as well - notice periods and extension clauses can be surprisingly strict. If you’re in Queensland and navigating end-of-term issues, lease renewal notice periods are worth understanding early so you don’t lose leverage by missing a deadline.

2. Consider The Right Structure And Signatures

How you sign a lease matters, especially if the tenant is a company.

For example, a company may be able to sign under section 127 of the Corporations Act, which can affect enforceability and reduce disputes about whether a document was properly executed.

Also consider whether the lease requires directors to give personal guarantees. A guarantee can expose personal assets even if the business is run through a company.

3. Keep On Top Of Notices And “Minor” Compliance

Many landlords start building a case for termination by documenting smaller breaches over time.

Practical habits that help:

• calendar rent dates and ensure payments clear on time;
• keep copies of insurance certificates and renewals;
• get written consent for changes (fit-out, signage, use changes);
• respond quickly to complaints or inspection reports; and
• keep your registered address for service up to date.

4. Have A Plan If You Need To Exit

Sometimes your business outgrows the premises, the location doesn’t work, or trading conditions change. If you might need to leave early, you’ll want to know your options:

• Assignment: transferring the lease to someone else (subject to consent).
• Subleasing: renting part or all of the premises to another party.
• Surrender: negotiating an agreed end date and formal handover.
• Break clause: if your lease has one, using it properly (with correct notice).

Where a dispute is already underway, getting advice on your exit options can also stop matters escalating into a forced termination and claim for damages.

5. Use Strong Written Agreements In Related Parts Of The Business

Lease disputes can spill into other areas - suppliers, contractors, staff rosters, and customer obligations.

For example, if you’re relocating or closing a site, you’ll want clarity in your customer-facing terms (especially if you take deposits), and you’ll want to manage staff changes lawfully. Having the right Employment Contract templates and processes in place can make transitions smoother and reduce the risk of disputes at the same time you’re dealing with lease issues.

Key Takeaways

• Commercial lease termination by landlord usually requires a valid trigger under the lease (such as non-payment of rent, serious breach, insolvency, or abandonment), and often requires proper notice and a chance to remedy the breach (with additional requirements sometimes applying under state/territory retail leasing laws).
• If you receive a breach notice or termination notice, act quickly: check the lease clause, confirm timeframes, gather evidence, and respond in writing.
• Many lease disputes can be resolved commercially (payment plans, agreed surrender, assignment), but you should be careful not to unintentionally admit liability or agree to unfavourable terms.
• Termination can expose your business to claims for unpaid rent, make-good costs, and other losses, so preventing disputes early is usually cheaper than fighting later.
• The best protection is upfront: negotiate clear lease terms, understand your obligations, and keep strong records so you can respond confidently if issues arise.

If you’d like help responding to a landlord notice or understanding your options around commercial lease termination by landlord, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.