Property and leasing · Australia
Commercial Lease Agreement Template (Australia)
The first question in any lease is whether it is retail, because retail leases legislation rewrites the deal in the tenant’s favour and a commercial lease does not. Drafted for genuinely commercial premises — office, industrial and warehouse.
What this document does
Where the money actually moves
Most lease disputes are not about rent. They are about outgoings that were never defined, a make good obligation nobody measured at the start, and a rent review mechanism one side did not understand. This template makes each of those explicit rather than leaving them to the end of the term.
What’s included
Clauses in this template
- Term, options and how they are exercised
- Rent, the review mechanism, and any ratchet
- Outgoings, defined and capped
- Permitted use and fit-out
- Make good, measured against a condition report
- Repairs, insurance and indemnities
- Assignment, subletting and security
- Default and termination
The law that applies
Retail or commercial, and why it decides everything
Characterisation first. Retail leases legislation applies according to the nature of the premises and their use, not according to what the lease is called. Getting this wrong changes who bears land tax, whether a disclosure statement was required, and which tribunal hears a dispute.
Land tax. Recovery from the tenant differs by state and is prohibited under Victorian retail leases. A national precedent that recovers land tax without qualification will be wrong somewhere.
Outgoings. Nothing implies a cap. If the lease does not define and limit outgoings, the tenant has signed an open cheque, and that is a commercial choice rather than a drafting oversight only if someone made it deliberately.
What goes wrong
Pitfalls we see in practice
Outgoings neither defined nor capped
Nothing implies a cap. Where the lease does not define what counts as an outgoing and does not limit the tenant’s share, the tenant has agreed to an open-ended obligation. That can be a deliberate commercial position. It usually is not, and the first substantial capital item makes the difference obvious to everybody.
Make good undefined, with no condition report
Make good disputes are evidentiary rather than legal. Without a dated photographic condition report annexed at the start, the parties argue at the end about a state of the premises neither can prove. The report costs an afternoon and removes the argument before it can happen.
A ratchet the tenant never priced
A ratchet clause stops rent falling at review. In a rising market nobody notices it. In a flat or falling one it becomes the single most expensive line in the lease, and tenants routinely sign it without modelling what it does across a ten-year term with options exercised.
Treating premises as commercial when the use makes them retail
Retail leases legislation applies according to the nature of the premises and their use. Getting it wrong changes who bears land tax, whether a disclosure statement was required, and which forum hears a dispute — and the error runs for the whole term, because it cannot be cured after the fact.
Questions
Frequently asked
Is my lease retail or commercial?
It turns on the premises and the use, not the label. Retail leases legislation is state-based and generally catches premises used wholly or predominantly for the sale or hire of goods, or the supply of services, to the public. If there is any doubt, resolve it before signing — the consequences of getting it wrong run for the whole term.
Who pays land tax under a commercial lease?
It depends on the state and on what the lease says. Recovery is permitted in some jurisdictions and prohibited in Victorian retail leases. A lease that recovers land tax without qualifying by state is a precedent that has not been localised.
What does make good actually require?
Whatever the lease says, measured against whatever evidence exists of the original condition. Without a condition report attached at the start, make good becomes an argument at the end, which is why the report matters more than the clause.
Related
Documents that usually go with this one
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Legally reviewed by [REVIEWER NAME], practising Australian solicitor — [DATE]. [DRAFT: confirm reviewer and date before publishing.]