Commercial leases are agreements between a landlord (lessor) and a tenant (lessee) for the rental of commercial property, such as office spaces, retail stores, or industrial sites. Understanding the basics of commercial leases in Australia is crucial for both landlords and tenants to ensure their rights and responsibilities are clear. Here are some key aspects:

1. Lease Term and Renewal Options:

• The lease term refers to the duration of the lease. It can range from a short-term lease (often less than three years) to long-term leases (which can exceed ten years).
• Renewal options may be included, allowing the tenant to extend the lease for a further term.

2. Rent and Rent Reviews:

• Rent is usually quoted as a yearly amount per square meter.
• Rent reviews are scheduled increases in rent. They can be fixed percentage increases, CPI (Consumer Price Index) increases, market review (to align with current market rates), or a combination of these.

3. Outgoings:

• Outgoings are expenses related to the property, such as council rates, water rates, insurance, and maintenance fees. The lease should specify which outgoings are payable by the tenant.

4. Security Deposit/Bank Guarantee:

• Tenants are generally required to provide a security deposit or bank guarantee as security for fulfilling their lease obligations.

5. Make Good Provisions:

• These clauses require the tenant to return the property to its original condition at the end of the lease. This can involve removing fit-outs, repairs, and repainting.

6. Use of Premises:

• The lease should clearly state what the premises can be used for. This is important for compliance with zoning laws and insurance policies.

7. Repair and Maintenance Obligations:

• The lease should outline who is responsible for repairs and maintenance of the property. This can vary significantly between leases.

8. Insurance Requirements:

• Tenants are typically required to have public liability insurance. The lease may also stipulate other types of insurance, like plate glass insurance or contents insurance.

9. Subleasing and Assignment:

• These terms refer to the tenant’s ability to lease the property to a third party. Conditions for subleasing or assignment should be clearly outlined in the lease.

10. Option to Purchase:

• Some commercial leases include an option for the tenant to purchase the property during or at the end of the lease term.

11. Legal and Regulatory Compliance:

• Both parties must ensure compliance with state and federal laws, including the Retail Leases Act (in states where it applies), building codes, and safety regulations.

12. Dispute Resolution:

• The lease should include provisions for resolving disputes, possibly through mediation or arbitration.

It is highly advisable for both landlords and tenants to seek legal advice before entering into a commercial lease in Australia. This helps in understanding their rights and obligations under the lease and under Australian law.