How To Draft a Notice of Termination of Lease for Your Commercial Property

Thinking about ending your commercial lease? The way you communicate termination matters. A clear, compliant notice of termination of lease can prevent confusion, protect your position, and reduce the risk of disputes.

Whether you’re a landlord or a tenant, getting the details right will help you exit smoothly. In this guide, we’ll walk through when you can end a commercial lease in Australia, how much notice is typically required, what to include in your notice, and how to serve it properly.

By the end, you’ll have a practical checklist you can use with confidence-plus tips on where legal advice can save you time, money and stress.

What Is a Notice of Termination of Lease?

A notice of termination of lease is a formal written communication from one party to the other confirming that the commercial lease will end on a specified date. It records your intention in writing and shows you’ve followed the lease’s process for bringing the tenancy to an end.

In practice, a good notice will clearly identify the lease, state the termination date, and explain the basis for termination (if the lease or law requires you to do so). It will also set expectations for handover-for example, returning keys, removing fitout, and dealing with outgoings or make-good obligations.

Importantly, it’s not the same as a casual conversation or email thread. Most leases include a “notices” clause that says how, when and to whom notices must be delivered for them to be valid. If you’ve been operating without a written lease, be aware there are additional risks and uncertainties-our overview on no lease agreement risks explains why clarity in writing is so important.

When Can You End a Commercial Lease in Australia?

The lease itself is your starting point. Commercial leases are contracts, and most termination rights are governed by those agreed terms (with some state-based rules for retail leases). Common scenarios include:

• End of Fixed Term: The lease runs to its expiry date and ends. Many leases are silent on any notice requirement at expiry. If yours does require notice to end or to avoid holding over, follow it precisely.
• Holding Over or Periodic Tenancy: If the tenant remains in occupation after expiry with the landlord’s consent, the lease may convert to a periodic tenancy (for example, month-to-month). The lease (or applicable law) will usually set the notice period to end a periodic arrangement.
• Early Termination by Agreement: You can mutually agree to end early and document this in a Lease Surrender Agreement or a Deed of Termination, including any settlement terms.
• Breach and Termination: If one party materially breaches the lease (for example, persistent non-payment of rent), the other party may have rights to terminate-but typically only after giving any required breach/rectification notice under the lease and waiting the specified cure period.
• Specific Contractual Rights: Some leases include break clauses, redevelopment/demolition clauses, or relocation clauses. These operate strictly according to their wording.
• Retail Lease Scenarios: Retail lease legislation (varies by state) does not generally give a broad, unilateral right to end a lease early. However, it does regulate things like disclosure, relocation and demolition. For example, in NSW, the Retail Leases Act NSW sets out detailed rules that can impact timing and process.

If you’re unsure which scenario applies, it’s best to have the lease reviewed before you act. For complex or high‑stakes matters, our Commercial Lease Review is a quick way to get clear on your options.

How Much Notice Do You Need?

There isn’t a one-size-fits-all rule. The required notice depends on your lease and, in some cases, state legislation for retail leases. Consider these principles:

• At Fixed-Term Expiry: If the lease does not require notice to end at expiry, the lease simply ends on the end date. If it does require notice (for example, to avoid automatic renewal or holding over), give exactly what the lease specifies and use the method of service it requires.
• During a Periodic Tenancy: If the lease converts to a periodic arrangement, check the lease for the notice period (for example, one month). If the lease is silent, seek advice-notice requirements can differ by jurisdiction and by the nature of the tenancy.
• Termination for Breach: Most leases require you to serve a breach notice first and allow a period to remedy. Only if the breach is not fixed within that time (or is incapable of remedy, depending on the clause) can you move to terminate.
• Retail Lease Timelines: Retail leases often include additional timing and content rules for certain scenarios (such as demolition or relocation). These rules sit alongside your lease; the stricter requirement typically applies.

Bottom line: follow the written lease and any applicable legislation to the letter. If timing is tight, it’s safer to give more notice than risk an invalid notice, provided that extra time doesn’t harm your position.

How To Draft Your Notice (Step-By-Step)

1) Confirm Your Right To Terminate

Re-read the lease to identify the clause you’re relying on. Note any pre-conditions (such as issuing a breach notice, waiting a set period, or paying outstanding amounts if you’re the tenant using a break clause). If the lease is retail, consider whether retail legislation imposes extra steps in your situation.

2) Identify the Parties and the Premises

Use the exact legal names and addresses of the landlord and tenant as they appear in the lease. Identify the premises precisely (street address and, if applicable, lot/plan or shop number in a centre).

3) Specify the Lease Details

Include the lease commencement date, the date of the lease (or deed) and any variations, so there’s no doubt which agreement you’re terminating. If there have been deeds of variation or assignments, reference those too.

4) State the Termination Date Clearly

Write the termination date in day/month/year format, and ensure it complies with any notice period in the lease. If you are terminating at expiry, state that the lease will end on the last day of the term.

5) Set Out the Basis for Termination (If Required)

If the lease requires grounds to be stated, refer to the specific clause (for example, break clause, expiry, breach of clause X). Keep it factual and neutral. Avoid argumentative language-you’re creating a formal record, not a negotiation letter.

6) Outline Handover and Make-Good Requirements

Summarise what must happen by the termination date. Common items include:

• Vacant possession (including removal of tenant’s fixtures and personal property)
• Make-good obligations (for example, reinstating the premises as specified in the lease)
• Returning all keys, passes, and access devices
• Settling rent, outgoings and any agreed adjustments
• Arranging a final inspection and condition report

7) Sign Correctly

The notice should be signed by an authorised person. If a company is signing and you choose to execute under company execution rules, follow the rules for signing documents under section 127. Otherwise, ensure the signatory is clearly identified and authorised (for example, a director or property manager with authority).

8) Prepare Supporting Documents (If Needed)

Where you’re ending early by agreement, you’ll usually pair your notice with a settlement document, such as a Lease Surrender Agreement or Deed of Termination, to resolve liabilities and set out the handover plan.

9) Use Clear, Professional Language

Keep it concise, precise and polite. Avoid accusations or commentary-if there’s a dispute, stick to the facts and the clauses you’re relying on. A professionally drafted template or quick advice can help you avoid pitfalls; our Lease Termination Advice is designed for exactly this step.

Serving the Notice and Next Steps

Serve the Notice Exactly as the Lease Requires

Most leases include a “notices” clause specifying acceptable delivery methods (for example, in-person delivery, registered post to a nominated address, or email if expressly permitted). Follow this strictly and keep evidence of service-postal receipts, courier confirmations, or email read receipts can be crucial if the notice is later challenged.

If your matter is in NSW and concerns vacant possession timing, the process overlaps with what’s typically covered when giving a notice to vacate a commercial lease, including aligning your service method with the lease’s notice clause.

Confirm Receipt and Plan the Handover

After serving the notice, follow up to confirm receipt and lock in the handover steps. Practical next actions often include scheduling a final inspection, agreeing on any make-good plan, and organising meter readings and keys.

Manage Bond/Security and Final Accounts

Handle bank guarantees or cash bonds according to the lease. Document any agreed offsets, rent reconciliations and outgoings adjustments. If an agreement is reached to finalise liabilities, record it in a short deed so both parties can move on with certainty.

If a Dispute Arises

Don’t escalate by email back-and-forth. Pause and get advice, particularly where retail legislation, redevelopment/demolition clauses, or complex make-good provisions are in play. A short consultation can make an outsized difference-our Commercial Lease Review can help you calibrate your next step and keep things commercial.

Common Pitfalls To Avoid

• Not following the notice clause: Serving to the wrong address or by an unapproved method can render a notice invalid. Always check the lease’s notices clause before sending.
• Wrong timing: Missing a contractual notice window (for example, a required months‑out notice to avoid holding over or renewal) can lock you into extra time and cost.
• Skipping breach prerequisites: If you’re terminating for breach, most leases require a breach notice and time to remedy first. Jumping straight to termination can backfire.
• Vague termination date: Ambiguity creates disputes. Use a clear calendar date and confirm the time (for example, by close of business).
• Overlooking make-good: Make-good can be one of the largest end‑of‑lease cost items. Reference the correct clause and agree the scope early to avoid last‑minute issues.
• Relying on assumptions about legal rights: Retail lease legislation regulates process and information but rarely gives a broad, unilateral early termination right. Treat statutory rights as scenario‑specific, not a catch‑all.
• Not documenting a deal: If you reach a commercial resolution (for example, early exit with payments or waived make‑good), record it in a Lease Surrender Agreement or Deed of Termination so expectations are clear.

If you’re working without a current written lease (for example, a long-standing arrangement that’s rolled on informally), you carry extra risk. Our overview of no lease agreement risks explains typical issues and why a documented exit plan is worth it.

Key Takeaways

• A notice of termination of lease is a formal, written step that helps you end a commercial tenancy cleanly and minimise disputes.
• Start with the lease: your termination rights, any prerequisites, the notice period and the service method are usually set out in the contract (with extra rules for retail leases in some states, such as the Retail Leases Act NSW).
• At fixed-term expiry, some leases require notice (for example, to avoid holding over), while others don’t-follow the document strictly and diarise key dates.
• For breach terminations, serve any required breach notice first and wait the cure period before issuing a termination notice.
• Your notice should identify the parties, the lease and premises, state the termination date, set out the basis (if required), and outline handover and make‑good steps.
• Serve the notice exactly as the lease requires and keep proof of delivery. Plan the exit with a condition inspection, bond/security handling and final accounts.
• If you agree to end early or settle liabilities, document it with a Lease Surrender Agreement or Deed of Termination so both sides have certainty.

If you’d like a consultation on drafting a compliant notice of termination of lease for your commercial property, reach out to us on 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.