Do I Need To Review My Agreement For Lease?

About to sign an Agreement for Lease for your new shop, office or warehouse? It’s an exciting step - but it’s also the moment where the key commercial and legal terms are locked in.

In Australia, your Agreement for Lease (often called an “AFL”) dictates everything from when you get the keys, to who pays for fitout works, to what happens if approvals are delayed. If something is missing or unclear here, you can be stuck with it for the entire lease term.

In other words: yes, you should review your Agreement for Lease - ideally before you sign. Below, we’ll walk you through what the AFL is, when to review it, the key clauses to check, common traps (especially for retail leases), and the practical steps to go from AFL to a binding lease with confidence.

What Is An Agreement For Lease (And Why It Matters)?

An Agreement for Lease is a binding contract that sets the conditions for entering into your lease in the near future. It’s commonly used when the premises is being built, refurbished, or where certain things must happen before you can take occupation (for example, council approvals or landlord works).

Think of the AFL as the “blueprint” for your actual lease: it records your core deal (rent, term, options) and the conditions that must be met before the lease starts (often called conditions precedent). If the AFL is drafted well, moving to the signed lease should be smooth. If not, disputes can arise - at the worst possible time, when you’re trying to open your doors.

If you want peace of mind before signing, consider a tailored Agreement for Lease Review so you understand the risks and can negotiate any changes up front.

When Should You Review An Agreement For Lease?

The short answer: as early as possible, and before you sign anything or pay significant deposits.

In practice, we see AFLs at a few points:

• Heads of Agreement or Offer to Lease stage - usually non-binding, but it sets the tone. It’s worth sanity-checking key points now.
• Draft AFL received - this is your main chance to review, raise issues and negotiate changes.
• Just before execution - a final cross-check to ensure all negotiated terms made it into the document (and schedules/annexures match).

Don’t wait until the lease itself. By then, the landlord will typically say, “this was already agreed in the AFL.” A thorough lease review is still important later, but the biggest leverage point is at AFL stage.

Key Clauses To Check Before You Sign

Every Agreement for Lease is different, but most cover a similar set of topics. Use the checklist below to guide your review - and flag anything that needs clarification or negotiation.

1) Conditions Precedent (Approvals, Works, Finance)

• Approvals and permits: Who is responsible for obtaining development approvals, building permits or change-of-use approvals? What are the timeframes and what happens if approvals are refused or delayed?
• Landlord works vs tenant works: Precisely define what the landlord will deliver (base build, services, essential services) and what you must complete (fitout, signage, specialist equipment). Attach plans/specs where possible.
• Access for design and fitout: Make sure you have early access (licence to occupy) for design, measure-up and contractor access, and that the landlord’s works won’t unreasonably interfere.
• Finance condition (if needed): If you’re relying on finance, include a clear condition precedent and a walk-away right if it can’t be secured by a stated date.

2) Milestones, Delays And “Sunset” Dates

• Programme and dates: Set realistic timeframes for landlord works, your fitout, and the target commencement date.
• Extension for delays: Who bears the risk of delays outside your control (e.g. approvals, base build delay, access issues)? Ideally, you should not be penalised for landlord or authority-caused delays.
• Sunset/cut-off rights: Include a right to terminate if the lease can’t start by a long-stop date, and clarify deposit refunds and removal of any bank guarantees if that happens.

3) Rent, Reviews, Outgoings And Incentives

• Base rent and increases: Confirm the rent (plus GST), the review method (CPI, fixed %, market) and when reviews apply.
• Outgoings: Spell out what you pay (rates, utilities, cleaning, maintenance) and any caps or exclusions - retail leases may limit what the landlord can recover.
• Incentives: Get incentives (fitout contributions, rent-free) documented clearly. If there’s a rent-free period for delays, you may also want a formal rent abatement mechanism tied to access dates.

4) Term, Options And Commencement

• Lease term: Check the initial term, any options to renew, how options are exercised and the timing for notices.
• Commencement trigger: Be precise about when the lease actually starts (e.g. practical completion plus occupation certificate plus handover of keys).
• Holdover/expiry: Note what happens at lease end (make good, removal of fitout, access for reinstatement).

5) Use, Exclusivity And Competition

• Permitted use: Ensure the permitted use is broad enough for your current offering and any reasonable future expansion.
• Exclusivity: In centres or strips, consider exclusivity (no competing tenants) or at least a restriction on direct competitors in adjacent space.
• Signage and branding: Secure rights to install external and internal signage, subject to approvals.

6) Fitout Rules, Landlord Approvals And Services

• Fitout approvals: Understand the design approval process, required certifications, and any preferred contractor rules.
• Base building services: Confirm power load, HVAC hours/after-hours rates, water, grease traps and other critical services for your business type.
• Make good: Define end-of-term make good so there are no surprises (e.g. “return to base build” vs “as is reasonable”).

7) Security, Guarantees And Insurance

• Security: Is a bank guarantee or bond required? For how much and when will it be returned?
• Personal guarantees: If you’re leasing through a company, check any director guarantees carefully - they put your personal assets at risk.
• Insurance: Confirm the types and levels of cover you must maintain (public liability, plate glass, contents, business interruption if specified).

8) Assignment, Subletting And Expansion

• Assignment/sublease: Clarify your right to assign the lease or sublet space (e.g. on a sale of business), and the landlord’s approval criteria.
• Relocation/demolition: Watch for relocation or demolition clauses - if they exist, make sure there are reasonable notice periods, cost coverage and a right to terminate if relocation isn’t viable.

9) Default, Termination And Dispute Resolution

• Default events: Check what counts as default and ensure there’s a reasonable period to remedy breaches before termination.
• Termination rights: Understand any early termination rights and how they interact with lease termination notices and state-based processes.
• Disputes: Include a sensible dispute resolution pathway (negotiation, mediation, then court) to avoid immediate escalations.

Retail Lease Considerations (State-Specific Traps)

If your tenancy is a “retail shop lease,” additional rules can apply under state and territory retail leasing legislation. These laws often require landlords to give disclosure statements and can restrict what outgoings are recoverable, how rent reviews operate, and what information must be provided before you commit.

For example, in New South Wales, the Retail Leases Act (NSW) sets out disclosure obligations, outlawing certain charges and prescribing timeframes. Similar retail lease laws exist in other states and territories, with differences that matter in practice.

Key retail lease points to watch:

• Disclosure timing: The landlord usually must provide a disclosure statement before you enter the lease (and sometimes at AFL stage). Check the deadlines and the consequences if disclosure is defective.
• Outgoings limits: Some costs can’t be recovered from you under retail laws, or only if properly disclosed.
• Marketing levies: In centres, marketing and promotion funds can be regulated - look for transparency and audit rights.
• Rent review limitations: Certain review methods can be restricted or must be clearly stated.

If you’re not sure whether your premises is “retail,” get advice early. The label affects your rights, negotiation leverage and long-term costs.

Common Risks If You Skip A Review

Skipping an AFL review often leads to problems that are hard (or expensive) to fix later. We commonly see:

• Unclear commencement triggers: You start paying rent even though you don’t have practical access, or your fitout is delayed by landlord works outside your control.
• Unexpected outgoings: Budget blowouts from charges you didn’t anticipate, or gaps in services that require expensive upgrades.
• Misaligned approvals: You take on responsibility for approvals that are difficult or impossible to obtain in time, delaying your opening.
• Personal exposure: Director guarantees or broad indemnities that expose your personal assets if things go wrong.
• Make good shocks: A costly obligation to strip the tenancy back to base build at lease end, when you expected a lighter standard.
• Relocation surprises: Being forced to move mid-term with little compensation or impractical alternatives.

If you end up needing to exit the deal, the process can be complex and costly. Understanding your options around breaking a commercial lease or issuing a notice to vacate depends heavily on what the AFL and the final lease say.

How A Lawyer Can Help (And What It Costs To Get Wrong)

Getting the AFL right can save you significant time and money. A commercial leasing lawyer will:

• Explain the document in plain English so you understand your obligations and risks.
• Spot gaps or one-sided clauses and suggest practical alternatives.
• Draft proposed amendments and negotiate with the landlord’s solicitor.
• Coordinate the AFL with the final lease, disclosure statements and any fitout approvals.

If you need targeted help, our team can support you with a focused lease review and amendment advice, or end-to-end guidance from AFL to lease signing with a Commercial Lease Lawyer.

The costs of getting it wrong often dwarf the cost of a review: months of additional rent due to delay, unexpected fitout spend, or disputes that stall your opening. A short investment up front can de-risk the deal and protect your cash flow.

Practical Next Steps To Move From Agreement For Lease To Lease

Ready to proceed? Here’s a practical pathway we recommend.

1) Line Up Your Documents And Plans

• Gather the heads of agreement, draft AFL, draft lease and any plans/specs.
• Confirm your intended fitout scope and timeline, and any authority approvals needed.

2) Review And Negotiate The AFL

• Work through the clause checklist above and list questions or risks.
• Engage a lawyer for a tailored Agreement for Lease Review so you can negotiate confidently and record changes clearly.

3) Align The AFL And The Lease

• Make sure negotiated terms appear in both documents consistently.
• Check definitions, dates and schedules match (especially plans, works scopes and insurance levels).

4) Confirm Retail Lease Requirements (If Applicable)

• Check disclosure statements and timeframes under the relevant retail lease law in your state/territory.
• Ensure outgoings and marketing fund obligations are accurately disclosed and lawful.

5) Finalise Security And Practicalities

• Arrange the bank guarantee or bond with your bank’s lead time in mind.
• Line up insurances and contractor bookings for fitout, in line with centre rules.

6) Execution And Access

• Execute the AFL and lease in the correct order, ensuring access/licence dates are clear.
• Confirm handover protocols (keys, passes, induction) so you can start works on time.

Key Takeaways

• An Agreement for Lease sets the rules for getting your premises and starting your lease - it’s essential to review it before you sign.
• Focus on conditions precedent, works responsibilities, rent/outgoings, commencement triggers, security, and exit/relocation rights.
• If your tenancy is a retail lease, state-based rules (e.g. the Retail Leases Act (NSW)) add disclosure and cost controls you should use to your advantage.
• Skipping a review can lead to delays, unexpected costs and personal exposure through guarantees and indemnities.
• A targeted legal review and negotiation can align the AFL with your commercial goals and reduce risk before you commit.

If you’d like a consultation about reviewing your Agreement for Lease, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.