Get your commercial lease reviewed

A Commercial Lease Agreement is a legally binding contract between a landlord and a business tenant, where the business rents the landlord’s commercial property. This type of property could include office spaces, warehouses, retail shops, or storage facilities—essentially, any property used for business purposes that is not residential.

The agreement outlines key terms of the lease, such as the rental amount, lease duration, permitted use of the property, maintenance responsibilities, and other obligations of both the landlord and tenant. Because this contract governs how your business can operate on the premises, it’s essential to carefully negotiate terms that align with your business needs. Having a well-drafted Commercial Lease Agreement can help avoid disputes and ensure the property arrangement supports your business objectives.

Before signing, it’s a good idea to consult a lawyer to ensure the lease terms are fair and reflect your business’s best interests.

Commercial Leases and Residential Leases differ in several important ways due to the nature of the properties and their uses:

• Purpose: A Commercial Lease applies to business properties such as offices, retail shops, or warehouses, while a Residential Lease applies to properties used for living purposes, like houses or apartments.
• Legal protections: Residential leases typically have more legal protections for tenants, such as limits on rent increases and stronger eviction protections. Commercial leases, on the other hand, offer fewer legal safeguards because the parties are expected to have more equal bargaining power.
• Negotiability: Commercial leases are often more flexible and negotiable than residential leases, allowing the parties to customise terms like rent reviews, repairs, and lease duration to suit business needs.
• Lease term: Commercial leases usually involve longer lease terms, often ranging from three to ten years, whereas residential leases are generally shorter, typically ranging from six months to two years.
• Repairs and maintenance: In a commercial lease, tenants are often responsible for maintaining the premises, including repairs, while in residential leases, landlords are typically responsible for the maintenance of the property.
• Outgoings: Commercial tenants are often required to pay additional expenses, such as property taxes, utilities, and maintenance costs, referred to as “outgoings.” In residential leases, these costs are typically included in the rent or covered by the landlord.

Understanding these differences is important so you can negotiate terms that fit your needs when entering a commercial lease, as the obligations and expectations are generally more complex than those in residential leases.

Before signing a Commercial Lease Agreement, it’s essential to carefully assess both the property and the terms of the lease to ensure they suit your business needs. Here are some key things to consider:

1. Visit the property: Make sure to inspect the premises in person to ensure it’s suitable for your business operations, including the location, size, and condition of the property.
2. Research the market rent: Compare the rental rates with similar properties in the area to ensure you’re paying a fair market price. Understanding current market conditions can help you negotiate better terms.
3. Read the lease thoroughly: It’s vital to carefully review all terms of the lease, including rent increases, maintenance obligations, and any restrictions on the property’s use. A lawyer can help you understand the finer details and ensure there are no hidden clauses that could be problematic later.
4. Long-term vs. short-term lease: Consider whether your business would benefit from a long-term or short-term lease. A longer lease may offer stability, while a shorter lease provides flexibility if your business is growing or could relocate.

Consulting with a lawyer ensures that your lease agreement is tailored to your specific business needs and helps protect you from future issues. For more guidance, you can read further here.

When entering into a Commercial Lease Agreement, there are several key terms you can negotiate to ensure the lease works for your business:

• Rent: This includes not only the base rent amount but also whether it’s fixed or subject to review during the lease period. You can negotiate rent-free periods or other incentives from the landlord.
• Lease duration: The length of the lease (also called the lease term) is crucial. You can negotiate whether you want a long-term or short-term lease, and whether there are options to renew the lease at the end of the term.
• Rent review: Many leases include clauses that allow the landlord to periodically review and adjust the rent. You can negotiate how and when these reviews occur, and whether increases are linked to market rates or inflation.
• Maintenance and repairs: Clarifying who is responsible for maintaining and repairing the premises is important. Tenants often want to limit their responsibility for structural repairs, while landlords may expect tenants to handle day-to-day maintenance.
• Outgoings: These are additional costs, like utilities or property taxes, that are typically passed on to the tenant. You can negotiate which outgoings you’re responsible for, and whether they’re capped or shared with the landlord.
• Break clauses: These clauses allow either party to terminate the lease early, under certain conditions. You can negotiate for a break clause to give your business flexibility if you need to leave the property before the lease term ends.
• Fit-out contributions: If the premises need significant improvements or modifications to suit your business, you can negotiate for the landlord to contribute to the cost of the fit-out.

Negotiating these terms can ensure the lease is better aligned with your business needs and provides you with the necessary flexibility and protection during your tenancy.

Signing a Commercial Lease Agreement is a significant commitment, so it’s essential to have the lease thoroughly reviewed before moving into a new premises. A legal expert can help you understand the terms of the lease and ensure it’s favourable to your business.

Commercial leases create legally binding obligations between you and the landlord, often lasting for several years. As the tenant, it’s crucial to know exactly what you’re agreeing to—especially when it comes to rent increases, maintenance responsibilities, and any restrictions on the use of the property.

Additionally, commercial lease agreements usually outline the process for handling disputes between the tenant and landlord. Understanding this section is important in case any issues arise down the track, such as disagreements over repairs or rent.

By having your lease reviewed by a lawyer, you can ensure the terms work in your favour, avoid hidden pitfalls, and protect your business interests in the long run. Our experts at Sprintlaw are here to help with any lease reviews.

Our Commercial Lease Review package starts at $1200 + GST. It includes an expert legal review of the commercial lease and Heads of Agreement from the landlord.

You’ll also get phone consultations with a Sprintlaw lawyer who will take your instructions and advise you on the legal issues you need to know.

Please note that this does not include any suggestions for amending the document. If you would like to receive a list of key suggested amendments which you can request from the other side, please see our Lease Review (Amendment Advice) package.