Commercial Lease Checklist: What To Review Before You Sign

Signing a commercial lease is one of the biggest commitments most small businesses make. It’s exciting (you’ve found “the” space), but it can also be risky if you sign before you fully understand what you’re agreeing to.

A lease isn’t just about the rent. It’s about who pays for repairs, what you can use the space for, what happens if you need to exit early, and whether your landlord can relocate you, redevelop, or change the rules mid-way through your term.

This checklist is designed to help you spot common issues, ask the right questions, and go into negotiations with confidence-so you can focus on building your business, not dealing with avoidable disputes later.

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What Counts As A Commercial Lease (And Why It Matters)?

A commercial lease is a contract where you rent premises to run your business. It might be:

• a shopfront in a shopping strip
• a warehouse or factory space
• an office suite
• a studio, consulting room, or clinic
• a hospitality venue (café, restaurant, takeaway)

Different rules can apply depending on what you’re leasing and where it’s located. For example, some leases are treated as retail leases under state and territory legislation (this varies by jurisdiction, the type of premises, and the nature of the business). Retail lease laws can affect things like disclosure requirements, outgoings, rent review rules (including what methods are allowed), and your rights (and obligations) at the end of the term.

Why does this matter? Because “commercial lease” is a broad label, and the protections (and risks) can change depending on whether a retail leasing regime applies and what your lease says.

If you’re unsure what type of lease you’re being offered, it’s worth getting it clarified early-before you spend time negotiating the wrong issues.

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Your Pre-Signing Commercial Lease Checklist (Quick But Important)

Before you get deep into clauses, start with the fundamentals. These are the things that, if wrong, can make the whole lease unworkable for your business.

1) Is The Space Legally Suitable For Your Business?

Confirm the premises can actually be used for what you’re planning to do. Ask about zoning, permitted use, and any building restrictions.

• Does the premises have the right approvals (e.g. food use, medical use, light industrial use)?
• Are there any conditions or restrictions on trading hours, noise, deliveries, or signage?
• Are there body corporate rules (for some buildings) that could limit your operations?

2) Does The “Permitted Use” Clause Match What You Do (And Where You’re Going)?

The permitted use clause is a big deal. If it’s too narrow, it can restrict your business as you grow.

For example, you might start as “coffee takeaway” but later want to add seating, sell packaged goods, or extend your menu. If the use clause doesn’t cover those changes, you may need the landlord’s permission (which may come with extra costs or conditions).

3) What’s The Real Cost Each Month (Not Just The Rent)?

Rent is only one part of the cost. Many leases require you to pay outgoings too, which might include:

• council rates
• water charges
• building insurance (often the landlord’s policy cost is passed on)
• common area maintenance (particularly in centres or complexes)
• security, cleaning, management fees

Ask for an estimate of outgoings and check whether the lease limits how they can increase.

4) What Term Are You Committing To (And Can You Renew)?

Think through:

• the initial lease term (e.g. 2, 3, 5 years)
• any option periods (e.g. “3 + 3 + 3”)
• how and when you must exercise an option (it’s easy to miss the window)

Also check whether the lease gives you a genuine right to renew, or whether it’s subject to conditions you might struggle to meet (like “no breaches” at any time).

5) Are You Being Asked For Personal Guarantees?

Many landlords ask small business owners to personally guarantee the tenant’s obligations-especially if the tenant is a company. This can expose your personal assets if the business can’t meet the lease obligations.

This isn’t automatically “bad”, but it’s a risk you should understand and (where possible) negotiate-especially if the lease term is long or the fit-out costs are high.

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Key Clauses In A Commercial Lease You Should Review Carefully

Once the basics make sense, the next step is to scrutinise the clauses that typically create disputes (or unexpected costs) later.

If you want a lawyer to go through the lease and flag practical risk points, a commercial lease review can help you understand what you’re signing in plain English and what you may be able to negotiate.

Rent Reviews And Increases

Check how rent increases during the lease term. Common methods include:

• fixed percentage increases (e.g. 4% per year)
• CPI increases (linked to inflation)
• market rent reviews (often at option/renewal points)

Market reviews can be unpredictable, and the process matters. If there’s a dispute, how is it resolved? Who appoints the valuer? Depending on the lease and the applicable law, can rent go down-or only up?

Outgoings Clauses

Outgoings clauses often look simple, but they can be expensive. Confirm:

• which specific outgoings are payable
• how they’re calculated and invoiced
• whether there are caps or exclusions
• what evidence the landlord must provide (e.g. invoices, annual statements)

Make Good Obligations (Exit Costs)

“Make good” clauses describe what condition you must leave the premises in when you vacate. This can range from reasonable to extremely costly.

Common make good requirements include:

• removing your fit-out
• repairing damage
• repainting
• returning the premises to a specific standard (sometimes “base building condition”)

Try to understand the likely dollar value of make good before signing-especially if you’re installing a significant fit-out.

Repairs And Maintenance (Who Pays For What?)

Leases often split responsibility between landlord and tenant, but the split can be surprising. Check:

• who maintains air conditioning units (and whether that includes replacement)
• who repairs structural issues vs internal issues
• who is responsible for plumbing, electrical, and fire safety systems

Where possible, aim for clarity. Ambiguity is where disputes start.

Assignment And Subleasing (If You Sell Or Restructure)

If your business grows, you might want to sell, restructure, or bring in a new operator. Your ability to assign the lease (transfer it) or sublease can be crucial.

Look for clauses about:

• whether the landlord’s consent is required (usually yes)
• the conditions for consent (e.g. financial checks, legal fees)
• whether the landlord can refuse consent and on what grounds

If you end up transferring the lease, you may need a Deed of Assignment of Lease to properly document the change and manage liability risk.

Fit-Outs, Alterations, And Signage

Many small businesses need fit-outs-especially in retail and hospitality. Confirm:

• whether you need landlord approval for works (and what the process is)
• who owns the fit-out at the end of the lease
• whether you must remove the fit-out as part of make good
• what signage is permitted (size, placement, approvals)

If the landlord promises “you can put up any signage you want”, ensure that permission is reflected in the lease or in written consent.

Insurance Requirements

Leases usually require tenants to hold certain insurances (for example, public liability insurance). Check:

• minimum cover amounts
• whether the landlord must be noted on the policy
• whether you’re required to insure glass, plate glass, or fit-out

This isn’t just a compliance exercise-if there’s an incident and your insurance isn’t compliant, it can become a serious financial issue.

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Due Diligence Questions To Ask Before You Commit

A commercial lease is legal paperwork, but good decisions also come from practical due diligence. Here are questions we suggest you ask (and get clear answers to) before signing.

What’s The History Of The Premises?

• Has the space had recurring issues (leaks, mould, aircon failures)?
• Are there planned works or upgrades that could disrupt trading?
• Is there a history of disputes with previous tenants?

Who Are The Neighbours (And Do They Affect You)?

Neighbouring businesses can be helpful-or harmful-depending on what you do.

• Are there any exclusive-use clauses in the building that restrict your offering?
• Could nearby tenants create noise/smell issues that affect your customers?
• Is there sufficient parking, delivery access, and foot traffic?

Are There Any Hidden Constraints?

Ask about:

• access rights (after-hours access, loading dock access)
• security arrangements and costs
• waste disposal requirements (especially for food/hospitality)
• any special rules in the centre/building

What Happens If You Don’t Have A Signed Lease Yet?

Sometimes you’ll be asked to “move in” while the paperwork is still being finalised, or you might be operating under emails and informal arrangements.

This can create serious risk. If you’re in that situation (or being pressured to start early), it’s worth understanding the risks of having no lease agreement in place.

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Negotiating Your Commercial Lease: Practical Levers For Small Businesses

Many small business owners assume a lease is “standard” and can’t be changed. In reality, plenty of commercial lease terms are negotiable-especially before you sign.

Here are practical areas where negotiation can make a meaningful difference.

Request A Rent-Free Or Reduced-Rent Fit-Out Period

If you need time to set up (fit-out, approvals, hiring), ask for:

• a rent-free period
• reduced rent for the first few months
• outgoings-free periods (sometimes possible)

This helps your cashflow while you’re not yet earning revenue from the location.

Clarify Or Limit Your Make Good

One of the best times to manage make good risk is before you install your fit-out. Options include:

• agreeing to “leave as is” (where practical)
• limiting make good to “reasonable wear and tear excepted”
• recording the current condition of the premises and attaching it to the lease

Add Flexibility If Your Business Changes

Depending on your business model, you may want:

• an early exit clause (break clause) with clear costs
• clear assignment rights (useful if you sell the business)
• a broader permitted use clause so you can evolve your offering

If you’re negotiating an extension, it can also be worth formalising it properly rather than relying on informal promises-an Extension of Lease can document what has changed and reduce confusion later.

Get The Right Help At The Right Time

Lease negotiations move quickly, and once you’ve signed, your leverage usually drops.

If you want a legal expert in your corner (including negotiating key points with the other side), speaking with a commercial lease lawyer can make the process far smoother-and help you avoid signing clauses you’ll regret later.

Have A Plan For “What If We Need To Leave?”

Even with great planning, things change: sales don’t meet forecasts, a co-founder exits, you pivot online, or you outgrow the space.

Before signing, check the consequences of ending the lease early, and what steps you’d need to take. If you’re already in a lease and need to leave, lease termination advice can be important-because exiting incorrectly can be very expensive.

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Key Takeaways

• A commercial lease is more than “rent for space”-it’s a long-term legal commitment that can impact your cashflow, operations, and ability to grow or exit.
• Before you sign, confirm the premises is suitable for your use, understand the full cost (including outgoings), and check whether the term and renewal options match your plans.
• Pay close attention to clauses around rent review, make good, repairs/maintenance, fit-outs, insurance, and assignment/subleasing-these are where hidden costs often appear.
• Do practical due diligence (history of the premises, neighbouring tenants, building rules, access, and planned works) so you’re not surprised after you move in.
• Many lease terms can be negotiated, especially before signing-so it’s worth asking for changes that reduce risk and improve flexibility.
• Getting legal advice early can help you understand what you’re signing and avoid being locked into terms that don’t work for your business.

This article is general information only and does not constitute legal advice. For advice tailored to your situation, get in touch with a lawyer.

If you’d like help reviewing or negotiating your commercial lease, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.