A commercial lease is a specific form of contract which deals with the rights and obligations of a business when they occupy premises leased from a landlord.

Before entering into a commercial lease, it is important to give consideration to a number of factors including:

  • The proposed use of the premises both now and into the future
  • What approvals may be required before undertaking any works to the premises and operating the proposed business
  • The term of the lease, and whether there are any options to renew
  • The rent and any outgoings which must be paid, and how the rent increases over the course of the lease
  • The repair and maintenance obligations during the lease – both on part of the occupant and of the landlord
  • Obligations regarding make when the lease comes to an end

When should you get legal advice?

Whilst the idea of a lease may seem simple, and many leasing agents will just issue a DocuSign link to a document to be signed by both parties, it is important that parties properly understand their rights and obligations before signing any lease documents.  A lease is a legal relationship which can last for many years and it critical that the parties understand the document which will govern that relationship – especially when unexpected things eventuate.

By discussing and negotiating amendments to the Lease prior to entering a Lease, both parties can seek to minimise the chance of disputes throughout the course of the lease.

Is it necessary to register a Commercial Lease?  

In New South Wales, if the term of the lease is for more than 3 years (including any option to renew) then the Lease must be registered at the LRS if the tenant wishes to protect its interest in the Lease.  The registration of a lease notes the tenant’s interest under the Lease on the title to the property.

If the term of the lease is for 3 years or less, it may be registered if both the landlord and tenant agree.

If a lease is unregistered, problems can arise if the landlord sells the premises.  A tenant is at risk of the new owner not recognising the lease and forcing the tenant to vacate the premises.

Generally, the landlord is responsible for registering a lease, but the costs of registration are often passed on to the tenant.

WMD Law have extensive experience in drafting, reviewing and negotiating leases.  For more information or advice, please contact our Property Team on (02) 9525 8688 or wmd@wmdlaw.com.au.