Repair And Maintenance Obligations Under Commercial Leases In Australia

If you run a small business from a shop, office, warehouse, studio, or other premises, your lease isn’t just about rent. One of the biggest “surprise cost” areas we see for tenants is repair and maintenance obligations under a commercial lease.

These clauses can decide who pays when the air conditioning fails, when the toilet blocks, when the roof leaks, or when the flooring wears out from everyday foot traffic. If you get it wrong (or don’t understand what you signed), the costs can be significant - and the dispute can take time and attention away from your business.

This guide walks you through how repair and maintenance obligations under a commercial lease typically work in Australia, what to watch for, and what practical steps you can take to reduce risk before and during the lease.

What Do “Repair” And “Maintenance” Obligations Actually Mean?

Commercial leases often use the words “repair”, “maintain”, “replace”, and “make good” as if they’re interchangeable. They aren’t - and the differences matter when you’re budgeting and planning.

Maintenance (Keeping Things Working)

“Maintenance” usually means routine, ongoing upkeep to keep the premises in working order. This might include:

• servicing air conditioning units
• cleaning gutters (where applicable)
• regular pest control
• maintaining doors, locks, and security systems
• checking plumbing fixtures and fittings for leaks

Maintenance is often preventative. The goal is to stop small issues turning into expensive problems.

Repairs (Fixing Damage Or Faults)

“Repairs” generally means fixing something that is broken, damaged, or not functioning properly. Common examples include:

• repairing a leaking pipe
• fixing a broken window
• repairing damaged walls after an incident
• fixing electrical faults

Repairs can be minor or major. A key issue in many leases is whether you (as tenant) are responsible for both minor repairs and structural or capital repairs.

Replacement (New For Old)

Some clauses go further than “repair” and require “replacement” when an item can’t reasonably be repaired - or where it is more cost-effective to replace it.

Replacement is a higher-cost obligation and often becomes a flashpoint for disputes (for example, whether an old air conditioning system should be repaired again, or replaced entirely).

Make Good (End-Of-Lease Condition)

“Make good” is usually a separate clause dealing with what condition you must leave the premises in at the end of the lease. This can include repairing damage, repainting, removing your fit-out, and returning the premises to a specified state (sometimes “base building” condition).

Even if your day-to-day maintenance obligations seem manageable, the make good clause can create a large end-of-lease bill if it’s broad or unclear.

Who Pays For What? Common Repair And Maintenance Split Between Landlord And Tenant

There’s no single rule that applies to every lease. Repair and maintenance obligations under a commercial lease come down to the drafting of your specific document, the type of premises, and sometimes mandatory rules (particularly for retail leases).

That said, many leases follow a familiar pattern, but the split can vary significantly from lease to lease (and, for retail leases, from state to state).

What Tenants Are Often Responsible For

Tenants commonly have obligations to:

• keep the premises clean and in good condition (including flooring, walls, doors, internal lighting and fittings)
• maintain and service equipment they use or control (like internal air conditioning units, grease traps, exhaust systems, alarms)
• repair damage caused by the tenant, staff, customers, contractors, or deliveries
• comply with laws relevant to their operations (for example, safety requirements connected to how you use the premises)
• promptly report defects to the landlord or centre manager

A big “watch out” is clauses that require you to keep the premises in “good repair” regardless of condition at the start of the lease. If you’re taking on a space that is already worn, you don’t want to accidentally agree to upgrade it at your cost.

What Landlords Are Often Responsible For

Landlords often remain responsible for items outside the tenant’s control, such as:

• structural elements (like foundations, structural walls, roof, and major building systems)
• base building services (depending on the building setup)
• common areas (especially in shopping centres or multi-tenant buildings)

However, leases can shift these responsibilities onto tenants (in whole or in part), especially in “as-is” arrangements, older buildings, or where the tenant negotiated a lower rent in exchange for taking on more upkeep. Always check the exact wording, because a small drafting change can materially alter who pays.

Insurance And Damage: A Common Source Of Confusion

Many repair disputes turn into an insurance debate: was the damage caused by an “insured event” (like storm damage), ordinary wear and tear, or tenant negligence?

It’s also important to understand the building insurance position - some leases require the landlord to hold it and recover the cost from tenants, while others deal with it differently. This question often comes up in practice: who pays for building insurance can depend on the lease structure and outgoings arrangement.

Retail Leases vs “Pure” Commercial Leases

If your premises is covered by a state or territory retail leases regime (for example, a shop in a retail centre), there may be restrictions on what can be passed on to the tenant and how it must be disclosed.

Even then, retail lease rules don’t automatically make repair obligations “tenant-friendly”. They usually create disclosure and process requirements, and in some jurisdictions they can limit how certain costs can be recovered - but the detail is state-by-state and depends on the lease and the specific cost.

How To Read (And Negotiate) Repair Clauses Before You Sign

The best time to manage repair risk is before you sign. Once you’re in the lease, your options can narrow quickly.

If you’re at the negotiation stage, getting a Commercial Lease Review can be particularly useful because repair and maintenance obligations are often spread across multiple clauses (and sometimes hidden in annexures, fit-out conditions, or disclosure statements).

1) Identify Exactly What “Premises” Covers

Check the lease definition of “premises”. Does it include:

• only the internal area you occupy?
• external areas (loading docks, exclusive-use courtyards, balconies)?
• plant and equipment (air conditioning units, hot water systems, roller doors)?

If the definition is broad, your obligations may be broader than you expect.

2) Watch For “Fair Wear And Tear” Carve-Outs

Many leases say you must keep the premises in good repair, except for “fair wear and tear”.

That phrase can be helpful, but it’s not a free pass. Wear and tear usually covers gradual deterioration through ordinary use - not damage, and not neglect. If you fail to maintain equipment and it breaks, the landlord may argue it’s not wear and tear.

3) Look For “Replace If Necessary” Language

Clauses that require you to “repair or replace” can become expensive fast, particularly for high-cost items like:

• HVAC systems
• electrical boards
• hot water systems
• roller doors / shutters

Ideally, you want clarity on whether those items are landlord responsibilities (as base building assets) or tenant responsibilities (as part of your tenancy fit-out).

4) Check For Compliance Upgrade Obligations

Some leases effectively make the tenant responsible for upgrading parts of the premises to meet updated legal requirements - even if the premises was compliant when the lease began.

This can show up as an obligation to “comply with all laws” at your cost, including works required by a government authority. Depending on the premises and your business type, this can become a major unplanned expense.

5) Do A Condition Report (Even If The Lease Doesn’t Mention It)

A practical way to reduce dispute risk is to document the condition at the start:

• take dated photos/videos
• note existing damage (cracks, stains, damaged tiles, worn carpet)
• record whether appliances and services are working

If a dispute arises later, this evidence can be very helpful when arguing whether you caused damage or whether the issue was pre-existing.

6) Negotiate Repair Caps Or Landlord Warranties Where You Can

In some situations, you may be able to negotiate:

• a cap on your liability for major repairs (for example, above a certain dollar amount)
• a landlord warranty that core services are in working order at the start of the lease
• an agreed maintenance schedule (so “maintenance” doesn’t become a vague obligation)

Not every landlord will agree, but it’s often worth raising - especially if you’re committing to a longer lease term.

Managing Repairs During The Lease Without Losing Time (Or Your Relationship With The Landlord)

Even if your lease is well-drafted, things will go wrong during the term. A practical process helps you control costs and reduce the risk of being blamed for delays or further damage.

1) Put A Repair Process In Writing

Many leases set out how you must notify the landlord of defects and request repairs. Follow that process closely - including any requirements about written notice, sending to a specific email address, or notifying a centre manager.

If your lease doesn’t spell it out clearly, create an internal process (even a simple checklist) for your team:

• who reports faults
• who contacts the landlord/agent
• how you approve quotes
• how you keep records (emails, photos, invoices)

2) Don’t Delay Reporting Issues

If you notice a problem that might be structural or base building (like water ingress, rising damp, or persistent electrical issues), report it promptly. Delays can:

• increase the damage and cost
• create safety risks
• give the landlord grounds to argue you failed to mitigate loss

3) Clarify Who Can Authorise Contractors

Shopping centres and managed buildings often require contractors to be approved and insured, and they may need to follow access rules (after-hours entry, sign-in procedures, etc.).

Before you engage a contractor, check:

• whether you need landlord approval
• whether the landlord will use their preferred supplier
• who pays
• whether the work affects common property or building services

4) Keep A Maintenance Log

A maintenance log can be simple, but it can save you in a dispute. Record:

• service dates (e.g., air conditioning servicing)
• issues reported and when
• quotes received and approvals
• works completed

This helps show you complied with your repair and maintenance obligations under the commercial lease, particularly if the landlord later claims you neglected equipment.

5) Be Careful With “Self-Help” Repairs

When something breaks, it’s tempting to just fix it and move on. But if the lease says the landlord must repair certain items, unauthorised works can sometimes create problems (including disputes about quality, safety, or whether you damaged something during the repair).

If it’s urgent, you can still act quickly - but do it carefully: notify the landlord immediately, keep evidence of the issue, and keep invoices and contractor reports.

What Happens If Repairs Are Ignored, The Premises Becomes Unusable, Or You Need To Exit?

When repair issues escalate, they can affect your ability to trade. This is where it’s important to understand your options, and the potential consequences of taking matters into your own hands.

If You Don’t Meet Your Obligations

If you breach your repair obligations, the landlord may have rights under the lease to:

• issue a breach notice requiring you to fix the issue by a deadline
• carry out the repairs themselves and recover the cost from you
• claim damages (for example, if your failure to repair causes further damage)
• in serious cases, terminate the lease (depending on the breach and the lease terms)

Because the stakes can be high, you generally want to deal with repair issues early, document communications, and get advice if the landlord’s position seems unreasonable.

If The Landlord Doesn’t Meet Their Obligations

If the landlord is responsible for a repair (for example, a structural fault) but delays or refuses to act, your options depend on the lease, the relevant state or territory rules (especially for retail leases), and the facts.

Possible steps can include:

• issuing a written notice requiring the landlord to repair
• seeking rent abatement or other relief, but generally only if the lease (or applicable legislation) provides for it
• considering dispute resolution mechanisms in the lease
• in serious cases, exploring termination rights (but be careful - this is rarely straightforward)

If the premises becomes unusable, there may also be “damage and destruction” clauses that deal with what happens to rent and whether either party can terminate. These clauses can vary a lot between leases, and retail leasing legislation can also affect the process in some states.

If You’re Thinking About Leaving Because Repairs Are Too Hard (Or Too Expensive)

Sometimes repair obligations are the final straw - especially if the business is changing direction, the building is ageing, or the lease terms are no longer sustainable.

If you’re considering ending the lease early, it’s important to understand the risks and process for breaking a commercial lease agreement. In many cases, “just leaving” can expose you to ongoing rent liability and other claims.

You may also need to think about the correct notice process. For NSW tenants in particular, the concept of a notice to vacate can be relevant depending on how the lease ends (expiry, termination, holding over, or negotiated surrender).

If There’s No Signed Lease (Or The Paperwork Is Messy)

Some businesses move in and start trading while the lease is “being finalised”, or continue occupying after expiry on informal terms. This can create real uncertainty about who must repair what, and what notice is required to end the arrangement.

If your situation is informal, it’s worth understanding the risks of no lease agreement - because repair obligations can become a major dispute when there isn’t a clear written framework.

Lease Renewal: Don’t Carry Old Repair Problems Into A New Term

Renewal time is a key opportunity to reset expectations. Before you renew, you should identify existing defects and negotiate who will fix them (and when).

It also helps to understand timing and notice requirements in your state, including lease renewal notice periods (even if you’re not in Queensland, it’s a useful reference point for how these issues can play out).

Key Takeaways

• Repair and maintenance obligations under a commercial lease can shift major costs onto your business, so it’s crucial to understand what you’re signing before you commit.
• “Maintenance”, “repairs”, “replacement”, and “make good” are different obligations - and small wording changes can significantly affect your liability.
• Often, tenants cover internal upkeep and damage they cause, and landlords cover structural elements, but leases (and retail leasing laws) can alter this split substantially.
• Practical steps like condition reports, maintenance logs, and prompt written notices can prevent disputes and help protect you if problems escalate.
• If repair issues push you toward exiting early, be cautious: leaving without a plan can trigger serious liability, so it’s worth getting advice early.

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