No Lease Agreements In Western Australia: Risks And Practical Legal Advice

Whether you’re hunting for your first shopfront or negotiating an extension on your current premises, it’s common to wonder if you can keep things “informal” and skip the paperwork.

In Western Australia (WA), it is possible for a tenancy to exist without a signed document. However, proceeding without a written lease can create uncertainty, increase risk and make disputes more likely and more expensive to resolve.

In this guide, we’ll explain what “no lease agreement” really means in WA, the legal and commercial risks, and how to protect your position. We’ll focus on commercial and retail tenancies (with a quick note on residential tenancies for context), and share practical steps to formalise arrangements the right way.

What Does “No Lease Agreement” Mean In WA?

A lease agreement is a contract between a landlord and a tenant setting out the terms for occupying a property. While leases are commonly documented and signed, a lease can also be created verbally or by conduct. For example, if a tenant moves in, pays rent, and the landlord accepts those payments, a tenancy may exist even though nothing is signed.

That’s where problems usually begin. Without a clear, written document, it can be difficult to prove:

• What rent is payable and when it can change.
• How long the lease lasts and whether there are options to renew.
• Who is responsible for repairs, outgoings and insurance.
• What happens on default, or at the end of the tenancy (make-good, notice, bond release).

In short, a tenancy can exist without a signed document, but you may not share the same understanding of the key terms-and you’ll have far less certainty if something goes wrong.

Do You Legally Need A Written Lease In WA?

There is no blanket rule in WA that every lease must be in writing. However, the law treats commercial/retail and residential tenancies differently, and documentation is strongly recommended in all cases.

Commercial And Retail Tenancies

Commercial leases (including retail shop leases) can be formed verbally or by conduct, but this is risky. WA legislation-including the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) for retail premises-imposes disclosure and documentation requirements, and regulates some lease terms.

If you operate a retail shop, landlords generally must provide proper pre-lease disclosure and give you a copy of the proposed lease before you commit. A purely verbal arrangement makes compliance and enforcement more complicated. In practice, both parties should insist on a clear written lease to capture agreed rent, fit-out, outgoings, options, relocation/renovation provisions, dispute resolution and termination rights. Having an experienced lawyer complete a thorough commercial lease review before you sign will help prevent nasty surprises.

Residential Tenancies

For context, residential tenancies in WA can be verbal or written under the Residential Tenancies Act 1987 (WA). If the agreement is in writing, it must use the prescribed Form 1AA, and the landlord must provide the “Information for Tenant” Form 1AC. If the agreement is not in writing, landlords must provide the Form 1AD information sheet instead.

Even if there’s no written document, the Act still applies to rent, repairs, bonds and termination rules. However, proving any extra terms (like garden maintenance or special conditions) becomes much harder without a written agreement.

This article focuses on commercial and retail leases. If you’re a residential landlord or tenant, the same principle applies-put it in writing-but your rights and obligations sit under a different statute.

Key Risks Of Leasing Without A Written Agreement

Proceeding without a written lease increases legal and commercial risk for both landlords and tenants. Common issues include:

• Unclear rent and rent review mechanics: Without a clear clause, you may be stuck arguing over timing, method (CPI, fixed, market) or whether an increase is allowed at all.
• Term and options uncertainty: Was the lease month-to-month or fixed term? Was there an option to renew? Without writing, each party may recall the deal differently.
• Maintenance and make-good disputes: Repairs, outgoings and end-of-lease make-good often drive conflict. If terms aren’t documented, disagreements can escalate quickly.
• Disclosure and compliance gaps (retail): Retail shop leases involve statutory disclosure before entry. Skipping documents makes compliance harder and can complicate enforcement or remedies.
• Enforcement difficulties: If you end up in a dispute, you’ll need to prove what was agreed. With no written record, outcomes can be unpredictable and costs can blow out.
• Financing and assignment hurdles: Lenders and prospective assignees typically require a proper written lease. An informal arrangement can derail finance approvals or a sale of business.

Bottom line: the cost of drafting and negotiating a proper lease is usually far less than the cost of dealing with uncertainty and disputes later.

What Actually Happens If There’s No Written Lease?

If the parties behave as if a lease exists-moving in, paying rent, managing repairs-a tenancy may be recognised by law. From there, different default positions can apply depending on the circumstances.

Commercial Tenancies: “Reasonable” Terms Fill The Gaps

Courts can imply terms that are necessary and reasonable in the circumstances. However, what’s “reasonable” for rent reviews, outgoings, make-good, or termination can be highly fact-specific. That uncertainty is exactly what commercial parties usually want to avoid.

For retail shop leases, the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) may apply and regulate certain terms and processes. That said, WA does not impose a universal minimum lease term (for example, there is no state-wide “5-year minimum” requirement). The length and options are a matter for negotiation and documentation, subject to the Act.

Residential Tenancies: The Act Still Applies

In residential scenarios, minimum standards around rent, repairs, bonds and termination apply under the Residential Tenancies Act 1987 (WA), even if the agreement isn’t written. But any “extra” terms will be harder to prove or enforce if they aren’t captured in the written agreement and condition report.

Either way-commercial or residential-operating without a written lease increases the risk that a disagreement turns into a costly dispute.

Practical Steps To Protect Your Position

If you’re already in premises without a signed lease, or considering taking possession before paperwork is finalised, there are steps you can take now to reduce risk.

1) Put The Agreement In Writing As Soon As Possible

The most effective fix is to formalise the arrangement in a clear, signed lease. Capture the rent and review method, the term and options, outgoings, insurance, permitted use, assignment/subletting, fit-out works, make-good, default remedies and a sensible dispute process.

Before signing, it’s smart to have a lawyer review the draft to align it with what you actually agreed and identify red flags. If you’re negotiating changes, getting targeted lease review and amendment advice can help you prioritise what matters and close the deal quickly.

2) Use The Right Document For Your Situation

Not every occupancy needs to be a full lease. For short-term or shared workspace scenarios, a property licence may be more appropriate (and faster to implement). A licence grants permission to occupy without creating the same proprietary rights as a lease, which can be useful for pop-ups, coworking or casual arrangements. Where a full tenancy is required, use a proper lease template tailored to the premises and fit-out plan rather than a generic form.

If you’re starting from scratch, consider a well-drafted commercial tenancy agreement or a property licence agreement to suit the deal.

3) Capture Disclosure For Retail Premises

For retail shop leases, ensure the statutory disclosure materials are provided at the right time before entry. Proper timing and content reduce the risk of later challenges and ensure everyone is on the same page about key commercial terms and the condition of the premises.

4) Keep Evidence While You Formalise

If you’re in an informal tenancy now, keep clear records-emails, rent receipts, maintenance requests, photos, and any messages recording agreed changes. If a dispute arises before you formalise, these records can help you evidence what was agreed.

5) Get Legal Help Early

Verbal deals and handshake arrangements can feel efficient, but they create risk you may not see until later. Having a commercial lease lawyer structure your arrangement and negotiate the terms can save a great deal of time, cost and stress down the track.

Signing As A Business: Structure And Personal Risk

If you’re entering a commercial lease, it’s worth thinking about who the tenant should be and how that affects risk. Many landlords prefer to lease to a company rather than an individual, and may ask for personal guarantees from directors.

• Sole trader or partnership: Simple to set up, but you’re personally liable for debts and obligations. If a dispute arises, your personal assets may be exposed.
• Company: A separate legal entity that can limit personal liability, though directors’ guarantees are common in leases. A company can also make it easier to onboard investors or sell the business later.

If you’re establishing a company for your tenancy, you can arrange your company set up before finalising the lease. Where there are multiple founders or investors, a Shareholders Agreement helps to set rules around decision-making, capital contributions and exits-particularly relevant if the lease is a core asset of the business.

Formalising Or Exiting An Informal Arrangement

Already occupying without a written lease? Here are common paths forward.

Document The Current Deal As A Lease Or Licence

Where both parties are aligned, you can capture the existing arrangement in a written lease or licence. Consider a short form for short terms, or a full-form lease for multi-year arrangements and fit-out commitments. If you’ve agreed options to renew, rent review timing, or special rights (like exclusive use), make sure they’re expressly written in.

Assign The Lease As Part Of A Business Sale

If you’re buying or selling a business that operates from the premises, you may need to transfer the tenancy to the buyer at settlement. This process is handled under a Deed of Assignment of Lease and usually requires landlord consent. If your arrangement has been informal to date, the parties will often formalise a lease first, then complete the assignment so the buyer can take over cleanly.

Exit Cleanly If The Arrangement Isn’t Working

Sometimes the best outcome is an orderly exit. If both parties can agree terms, a Lease Surrender Agreement can bring a tenancy to an end on an agreed date, dealing with make-good, bond release and any settlement amounts. This is especially useful when the written terms are unclear and the priority is to reduce risk and move on.

Negotiate Improvements To A Draft Lease

When a landlord provides a draft lease, don’t assume it’s set in stone. Common negotiation points include:

• Clarifying permitted use and any exclusivity.
• Fine-tuning rent review timing and methods.
• Defining outgoings and any caps.
• Adjusting fit-out requirements and make-good to reflect the actual premises.
• Setting fair default and termination processes and realistic notice periods.
• Ensuring relocation or refurbishment clauses are reasonable and workable.

Get the draft checked against what you actually agreed, and align the lease with your operational needs. If you need targeted help, a focused lease review and amendment can help you secure better terms without dragging out the process.

Frequently Asked Questions

Is A Verbal Commercial Lease Enforceable In WA?

It can be, but proving the terms is the hard part. You may establish that a tenancy exists through conduct (possession and rent), but key terms like rent reviews, term and options, or make-good will be uncertain. A written lease removes this uncertainty and makes enforcement more straightforward.

Does WA Require A Minimum 5-Year Retail Lease?

No. Unlike some other states, WA does not impose a universal 5-year minimum term for retail shop leases. Term and options are negotiated, subject to the retail legislation. That’s another reason why documenting what you agree is so important.

Can I Start With A Licence Instead Of A Lease?

Yes. For short-term or flexible arrangements, a licence can be more appropriate than a lease because it grants permission to occupy without creating the same proprietary rights. If that flexibility suits both parties, consider a Property Licence Agreement.

What If We Can’t Agree On A Written Lease?

If negotiations stall, keep communicating and consider a short-term documented arrangement while you continue to negotiate. If the relationship isn’t workable, explore a structured exit using a lease surrender to reduce ongoing risk.

When Should I Speak With A Lawyer?

Ideally before you sign or move in. If you’re already in occupation, get advice now-there are options to formalise the deal, reduce risk, or plan a clean exit. A commercial lease lawyer can help you decide the best pathway and document it properly.

Key Takeaways

• A tenancy can exist in WA without a signed lease, but it’s risky-uncertainty around rent, term, outgoings and make-good often leads to disputes.
• Retail shop leases in WA involve statutory disclosure and documentation; a clear written lease is the best way to ensure compliance and protect your rights.
• WA does not mandate a universal 5-year retail lease term-the length and options are negotiated and should be documented clearly.
• If you’re already occupying informally, keep records, formalise the arrangement promptly, and consider whether a lease or a licence is the right fit.
• Think about structure before you sign-leasing through a company can help manage personal risk, and a solid governance framework (like a Shareholders Agreement) supports long-term plans.
• When buying or selling a business, plan for tenancy transfer with a Deed of Assignment of Lease, or use a lease surrender if an orderly exit is the best option.

If you’d like help drafting, reviewing or formalising a commercial lease in Western Australia, you can reach our team at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.