Lease Review Checklist: What Every Australian Lessee Must Check Before Signing a Commercial Lease

Australian government guidance notes that leasing costs are often one of a small business’s largest ongoing expenses, alongside wages and stock. For many lessees, the lease you sign will make or break the profitability of your business.

A careful lease review is not about “being difficult” with the landlord. It’s about knowing your total occupancy cost, how easily you can exit if things change, and how much risk sits on your shoulders vs the landlord’s.

This checklist walks you through a structured commercial and retail lease review for Australian lessees, shows where state-based rules matter, and highlights the points where getting a fixed-fee lawyer review can save you from years of expensive mistakes.

Table of Contents

• Quick Summary
• What Is a Lease Review and Why It Matters
• When to Get Your Commercial Lease Reviewed
• Step-By-Step Lease Review Checklist
  • Step 1: Understand the Deal Structure
  • Step 2: Check Rent, Increases, and Incentives
  • Step 3: Outgoings, Repairs, and Make-Good
  • Step 4: Use, Zoning, and Fit-Out
  • Step 5: Security, Guarantees, and Risk Allocation
  • Step 6: Retail Lease Protections
  • Step 7: Red Flags That Need Legal Advice
• Compliance, Risk, and State Differences in Australia
• How Much Does a Lease Review Cost and How Long Does It Take?
• Practical Tips for Negotiating Your Lease
• Get Expert Help With Your Lease Review
• Frequently Asked Questions
• Recommended

Quick Summary

Takeaway	Explanation
Get the lease reviewed before signing anything	Involve a lawyer at heads of agreement or draft lease stage, not after you’ve verbally agreed or paid money.
Focus on total occupancy cost, not just rent	Add rent, outgoings, fit-out, make-good, and rent increases to understand the real cost over the whole term.
Watch security and guarantees	Bank guarantees, bonds, and personal guarantees can expose your personal assets if the business struggles.
Retail leases have extra protections	State and territory retail leasing laws give tenants rights (disclosure, timing, limits on certain costs). Use them.
Identify non-negotiables and red flags	Harsh default clauses, relocation rights, and broad indemnities are common traps that warrant legal advice.
Fixed-fee lease reviews reduce risk	A structured lawyer review (like AirCounsel’s) flags risks, suggests changes, and gives you a clear negotiation plan.

What Is a Lease Review and Why It Matters

A lease review is a detailed, clause-by-clause check of a draft commercial or retail lease to:

• Confirm the document matches what you think you agreed.
• Uncover hidden costs and risks.
• Ensure it complies with Australian law (including retail lease rules where they apply).
• Identify changes you should request before signing.

Commercial and retail leases are written to protect the landlord. Without a structured review, lessees often miss:

• Open-ended outgoings.
• Unfair make-good obligations.
• Clauses that let the landlord move you, change common areas, or terminate early.
• Traps in rent review formulas that make your occupancy far more expensive over time.

Government guides for small business repeatedly stress that leasing premises is a major financial decision and recommend professional advice before you sign a lease for your business premises. For example, the Queensland Government’s guide to leasing business premises highlights the need to understand all lease costs, conditions, and your legal obligations.

When to Get Your Commercial Lease Reviewed

Timing can dramatically affect your bargaining power and legal options.

• At heads of agreement (HoA) stage
  Many deals start with a short document setting out rent, term, options, incentives, and key conditions. Have a lawyer sanity-check the HoA before signing so you don’t lock in bad commercial terms that are hard to unwind later.

• Before signing any disclosure statement (for retail leases)
  In most states and territories, landlords must give retail tenants a disclosure statement and information brochure before the lease. You should understand and, if necessary, challenge items in the disclosure (like outgoings and refurb obligations) before you sign.

• When you receive the draft lease
  This is the main point for a full lease review. A lawyer can compare the lease to the HoA and disclosure, flag inconsistencies, and suggest alternative drafting.

• Before paying significant money (fit-out, deposits, guarantees)
  Avoid committing to expensive fit-out works or long lead-time equipment until your lease is signed on terms you can live with.

Step-By-Step Lease Review Checklist

Use this section as a practical checklist when you sit down with your lease (and ideally, your lawyer).

Step 1: Understand the Deal Structure

Start with the big picture:

• Premises: Does the plan clearly show the area you’re leasing, common areas, parking, storage, and signage locations?
• Lease term: What is the initial term (e.g., 3 or 5 years)?
• Options to renew: Are there 1 or more options (e.g., “3 + 3 + 3” years)? How and when must you exercise them?
• Type of lease: Retail (e.g., shops, food outlets) or non-retail commercial (e.g., office, warehouse)? This affects which laws apply.
• Commencement and rent-free: When does the lease actually start? Does a “fit-out period” count towards the term? Is there any rent-free period or incentive documented?

A quick table to sanity-check the commercial skeleton:

Item	What to Confirm	Why It Matters
Premises description and plan	Matches the area you inspected and includes agreed parking/storage	Avoids paying for space you can’t use or missing areas you assumed were included
Term and options	Length suits your business plan and growth; option dates are realistic	Too long = inflexibility; too short = no security of tenure
Lease type (retail vs commercial)	Correct classification given your use and location	Retail classification may give you extra statutory protections
Start date and rent-free	Clear trigger events and dates	Avoids paying rent before you can actually trade

Step 2: Check Rent, Increases, and Incentives

Rent structure is more complex than just “$X per month”.

• Base rent

  • Is it quoted annually or monthly? Plus GST?
  • Is it based on floor area? If so, how measured and can it change?

• Rent reviews (increases)
  Common methods:

  • Fixed percentage (e.g., 3% each year).
  • CPI (inflation-based).
  • Market rent review at certain intervals or on option.

  Key questions:

  • Is there a ratchet clause (rent can go up but not down on review)?
  • Are you protected against sudden large jumps on market review?

• Turnover rent (for some retail leases)
  If any rent is based on turnover:

  • How is turnover defined?
  • What records and reporting must you provide?

• Incentives and fit-out contributions
  Any rent-free periods, contributions, or fit-out rebates should be:

  • Clearly set out in the lease.
  • Tied to objective milestones (e.g., opening date).
  • Not clawed back unfairly if you leave early for reasons beyond your control.

Step 3: Outgoings, Repairs, and Make-Good

Total occupancy cost includes everything you must pay under the lease, not just rent.

• Outgoings
  Check which operating expenses you must contribute to, such as:

  • Council rates, water, and land tax.
  • Insurance premiums.
  • Cleaning, security, and common-area maintenance.
  • Centre marketing or promotion levies (for retail centres).

  For retail leases, state laws often limit what outgoings can be passed on and require landlords to provide outgoings estimates and annual statements. The ACCC’s page on retail tenancy agreements highlights the role of state and territory laws in setting disclosure and cost rules for retail tenants.

• Repairs and maintenance

  • Who maintains structure, services (air-con, plumbing, electrical), and common areas?
  • Are you responsible for all internal repairs, including fair wear and tear?

• Make-good at lease end
  This is a major area of dispute. Watch for:

  • Clauses requiring you to “reinstatement to base building condition” or similar.
  • Obligations to remove all fit-out, services alterations, and signage.
  • Requirements to replace (not just repair) floor coverings, paint, etc.

A fairer approach is often limited to:

• Repairing any damage.
• Removing your fixtures and fittings.
• Leaving the premises clean and tidy.

Step 4: Use, Zoning, and Fit-Out

Even if the premises looks perfect, you must confirm you’re legally allowed to run your intended business from it.

• Permitted use clause

  • Is it broad enough to cover your current and possible future activities?
  • Avoid very narrow descriptions (e.g., “espresso coffee only”) if you may expand.

• Planning and zoning

  • Check local planning rules to ensure your intended use is allowed in that location.
  • If you need a development approval or change of use, confirm who is responsible and what happens if approval is refused or delayed.

• Fit-out approvals

  • What approvals do you need from the landlord for fit-out designs, services, and signage?
  • Are there design guidelines or centre rules you must comply with?
  • Who owns the fit-out at the end of the lease?

If the landlord promises a “turn-key” or partially fitted premises, the lease should describe the works, timing, and what happens if they’re delayed.

Step 5: Security, Guarantees, and Risk Allocation

Security is how the landlord protects itself if you default. For you, it’s where your risk extends beyond just the business.

• Security deposit or bank guarantee

  • How much (e.g., 3–6 months’ rent plus outgoings and GST)?
  • When can the landlord draw on it?
  • When must it be returned after lease end?

• Personal guarantees (directors or individuals)

  • Are you personally guaranteeing the company’s obligations?
  • Is the guarantee limited (cap, duration) or unlimited?

Personal guarantees and large bank guarantees can expose your personal assets (home, savings) if the business struggles. It’s often possible to negotiate:

• Smaller security amounts.

• Limited guarantees (e.g., to the first term only, or capped).

• Insurance and indemnities
  Check:

  • What insurances you must hold (public liability, plate glass, contents, business interruption).
  • Whether the landlord is also insured.
  • Indemnity clauses that make you liable for losses beyond your control or already covered by insurance.

Step 6: Retail Lease Protections

If your lease is for a “retail shop” (often in shopping centres or strip retail), your state or territory’s retail leasing legislation will usually apply. While details differ, these laws commonly:

• Require landlords to give you:
  • A disclosure statement with key commercial terms and costs.
  • An information brochure explaining your rights and obligations.
• Impose minimum notice periods before the lease starts.
• Limit certain charges (e.g., some marketing or legal costs).
• Regulate relocation and demolition clauses.

For example, the NSW Government’s guidance on commercial and retail leases highlights disclosure obligations, rent, options, outgoings, and make-good as key areas for tenants to understand.

Your lease review should always check:

• Whether the lease correctly states that retail legislation applies (where relevant).
• That disclosure timing and content requirements are met.
• That any clauses inconsistent with mandatory legislation are identified and, ideally, amended or removed.

Step 7: Red Flags That Need Legal Advice

Some clauses are so impactful that you should not sign without professional advice. Watch for:

• Unilateral termination rights
  Clauses allowing the landlord to terminate early for convenience, redevelopment, or sale with little notice or compensation.

• Relocation and demolition
  Terms that let the landlord move you to another shop or end the lease if they redevelop, without:

  • Reasonable notice.
  • Compensation for relocation and fit-out costs.
  • Rent adjustments if the new premises is worse.

• Harsh default and interest clauses

  • Very high default interest rates.
  • Automatic termination for minor or technical breaches.
  • “Costs on indemnity basis” for any landlord enforcement action.

• Broad indemnities
  Indemnities making you liable for:

  • All loss suffered by the landlord, even beyond your control.
  • The landlord’s own negligence or building defects.

• Unusual trading-hours requirements (for retail)

  • Mandatory extended hours, public holidays, or late-night trading, with penalties if you close.
  • Requirements that don’t match real customer demand or staffing capacity.

If you see any of these, a structured, fixed-fee lease review (like AirCounsel’s Commercial / Residential Lease Agreement Review) can flag your options: from requesting targeted amendments to walking away if the risk profile is too high.

Compliance, Risk, and State Differences in Australia

Commercial and retail leasing in Australia is governed by:

• General contract law and property law (similar across the country).
• Specific state and territory legislation, especially for retail shop leases.

Examples include:

• NSW: Retail Leases Act 1994 (NSW).
• Victoria: Retail Leases Act 2003 (Vic).
• Queensland: Retail Shop Leases Act 1994 (Qld).
• Western Australia: Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), with tenant guides like the WA Retail shops leases – tenant’s guide.

Key differences by state can include:

• The definition of a “retail shop”.
• Timing and form of disclosure.
• Whether landlords can pass through land tax.
• Rules on marketing funds and sinking funds.
• Restrictions on ratchet clauses or certain indemnities.

Your lease review should always consider which state or territory law applies and whether any clause is inconsistent with mandatory provisions (in which case it may be void or need amending).

How Much Does a Lease Review Cost and How Long Does It Take?

Costs and timelines depend on:

• The length and complexity of the lease.
• Whether it’s a straightforward office/warehouse or a heavily negotiated shopping centre lease.
• How many rounds of negotiation you want your lawyer to handle.

A typical pattern:

• Standard commercial lease (office/warehouse, 20–40 pages)

  • Review and written comments: often 1–2 business days.
  • Follow-up call and suggested amendments: short additional time.

• Retail centre lease (with disclosure, rules, and multiple annexures)

  • Longer review time due to more documents and centre-specific rules.
  • More negotiation around relocation, marketing, and turnover rent.

AirCounsel offers a fixed-fee Commercial / Residential Lease Agreement Review starting from AUD 375, with clear timelines (often within 2 business days, with express options). This gives you certainty on cost and turnaround, rather than open-ended hourly billing.

If negotiations become more complex, you can add focused Negotiation Support hours so a lawyer can deal directly with the landlord or agent.

Practical Tips for Negotiating Your Lease

A solid lease review prepares you for productive negotiation. A few practical tips:

• Prioritise your “must-haves”

  • Reasonable total occupancy cost.
  • Security of tenure (options).
  • Fair make-good.
  • Manageable security and guarantees.

• Use your leverage early
  Your best leverage is before you sign anything or commit to fit-out. Once the landlord thinks the deal is “done”, changes become harder.

• Ask for commercial, not just legal, changes
  Examples:

  • Cap outgoings increases.
  • Reduce security from 6 months to 3 months’ rent.
  • Add a break clause if key approvals are not obtained.

• Document everything

  • Ensure all agreed incentives, rent-free periods, and contributions are in the lease, not just email chains.
  • Check the lease against the heads of agreement and disclosure.

• Be realistic and collaborative
  Landlords expect some negotiation. Framing changes as “market standard” or “balancing the risk fairly” is usually more effective than aggressive demands.

If you’re unsure how far to push, a short written legal opinion through AirCounsel’s Written Legal Opinion service can outline your realistic options and fallback positions.

Get Expert Help With Your Lease Review

A commercial lease can lock you in for 3, 5, or even 10 years. Spending a small, fixed fee on a professional lease review now is often far cheaper than living with an expensive or unworkable lease later.

With AirCounsel’s fixed-fee, fast-turnaround Commercial / Residential Lease Agreement Review, an experienced Australian solicitor will:

• Review your lease, disclosure, and heads of agreement.
• Flag hidden risks in plain English.
• Recommend practical amendments you can send straight to the landlord or agent.

If you need help pushing for changes, you can add flexible Negotiation Support hours so a lawyer can handle the back-and-forth for you, keeping you protected while you stay focused on your business.

Frequently Asked Questions

When should I get a lawyer to review my commercial lease before I sign it?

Ideally, you should engage a lawyer at the heads of agreement stage and again when you receive the draft lease (and disclosure statement for retail leases). Do this before you pay major deposits, sign a disclosure, or start fit-out, while you still have leverage to negotiate.

What are the most important clauses to check in an Australian commercial or retail lease?

Focus on rent and rent reviews, outgoings, lease term and options, use and zoning, repairs and make-good, security (bond/bank guarantee), personal guarantees, default and termination clauses, relocation/demolition rights, and any unusual indemnities or trading-hours requirements. These are the clauses that most affect your cost, flexibility, and risk.

How can I tell if I am paying a fair rent and outgoings under my lease?

Compare the total occupancy cost (rent + outgoings + key fit-out and make-good costs) to similar premises in your area. Talk to other tenants where possible, and review the landlord’s outgoings estimates and previous years’ statements (for existing buildings). A lawyer can also sanity-check rent review mechanisms and caps to ensure you are not exposed to unreasonable increases.

What risks do personal guarantees and security deposits create for lessees in Australia?

Personal guarantees and large security deposits or bank guarantees can make you personally liable if the business can’t meet its obligations. The landlord may be able to claim against your personal assets or bank guarantee for unpaid rent, outgoings, and even make-good costs. Where possible, negotiate lower security amounts, limited-duration or capped guarantees, or alternative security structures.

Can I negotiate a “standard form” or shopping centre lease?

Yes. Even heavily “standard” leases are often negotiable, especially on commercial points like rent, options, security, make-good, and relocation clauses. Shopping centre landlords may resist legal changes to their template, but targeted side letters or specific amendments are often achievable. A lawyer familiar with these leases can help you focus on the most important and realistic changes.

What if I have already signed the lease and then find a problem?

Your options are more limited once the lease is signed, but not always zero. Depending on the issue, you may be able to rely on retail lease legislation, misrepresentation, or negotiate a variation with the landlord (especially if they value your tenancy). A focused question through AirCounsel’s Ask an Australian Solicitor a Question service can quickly outline your realistic paths forward.

Recommended

• Commercial / Residential Lease Agreement Review – Fixed-fee, solicitor-reviewed commercial or retail lease before you sign.
• Negotiation Support – On-demand legal help to negotiate better lease terms with your landlord.
• Custom Lease Agreement – Bespoke, lawyer-drafted lease if you’re subleasing or granting a lease to someone else.