A commercial lease is a document that sets out the rights and obligations of an owner of commercial property (the landlord or lessor) and a third party that has agreed to occupy the property (the tenant or lessee).

Depending on the circumstances, commercial leases come in different forms including:

  • Retail leases;
  • Commercial leases;
  • Licences; and
  • Subleases.

Retail Leases

Retail leases are used wholly or predominantly for retail shop business. Typically, this is the case whether or not the shop is within a shopping centre. In Australia, the legislation which governs retail leases differs from state to state. A distinguishing feature of a retail and commercial lease is that the retail legislation imposes obligations on the landlord and provides rights and protections to tenants who lease retail premises. It is important to determine whether the relevant retail legislation in your state or territory applies to the premises early. This will impact:

  • the requirements you must fulfil before entering the lease;
  • the contents of the lease; or
  • what will occur after entering the lease.

Commercial Leases

A commercial lease is for a commercial space, such as a factory or office space. Concerning rent, you can prepare commercial leases on many bases. For example, you could calculate rent on:

  • base rent with no outgoings (otherwise known as a gross lease);
  • base rent plus outgoings;
  • base rent plus a percentage of sales (referred to as turnover rent); or
  • rent review as market review, a fixed percentage or based on CPI measure.

Licences

A licence is, at law, a right of use. This differs from a lease that provides a legal right of registration. A licence of premises is usually best for short-term leasing periods. Given the short-term length of the licence agreement, it is less common for the licence to include provisions for the amount of rent to be adjusted, requiring the tenant to pay outgoings in addition to rent or for the tenant to undertake any repairs or maintenance. However, given the short-term nature, licences also only sometimes include an option to renew the term. As such, it is more suitable for businesses that would like to operate only for a short period. However, suppose you consider operating the premises for a longer period of time. In that case, it may be in your interest to enter into a short-term lease instead, with options to renew. For instance, consider a one-year lease. Another distinguishing feature of a licence is that the occupants are not usually given ‘exclusive possession’. This will vary from licence to licence but often means that the licensor of the premises has greater rights to enter into the premises at any time.

Subleases

A sub-lease is an agreement between the tenant and a third party (the sub-lessee) to assume the tenants obligations under the lease with the landlord. Further, it is documented as a new agreement between the tenant and third party where the third party becomes a sub-tenant under a sublease agreement. Moreover, this may or may not be on the same terms as the lease between the landlord and tenant. Typically, a lessor must consent to a sublease before it can be entered into. Additionally, a tenant cannot enter a lease via a sublease unless the lease permits it and the landlord consents. Provisions under a lease that allow for sublease with the landlord’s consent are attractive to a tenant as they allow the tenant to have a level of flexibility to grant occupation rights to another party (for the whole or a portion of the property). Therefore, the tenant can downsize its operations before the expiry of the lease term. However, it is essential to note that entering into a sublease does not always mean that the tenant has no future obligations to the landlord. Hence, you should always seek legal advice when entering into such an arrangement.

As a landlord or tenant, it is vital to understand commercial leases before getting into them. Please contact one of our experienced leasing lawyers if you require a commercial lease reviewed or if you need help in drafting a commercial lease.

Need help?

If you find yourself having any legal issues and would like more information about how you should proceed, contact us now at 08 6161 0243 or submit an enquiry form below:

Recent articles

Binding Financial Agreements or “Prenuptial Agreements”

We at AH2 Legal often get asked by couples intending to marry soon or wanting to commence a de-facto relationship – “How can we protect our assets if our relationship or marriage fails?” Many pe
Read more >

Animal Cruelty

We at AH2 Legal sometimes get questions from people who have been accused of being cruel to their pets. Sometimes, people get into trouble with the law and end up having to go to Court to defend thems
Read more >

Bail Applications

If you have been charged with an offence, you are presumed to be innocent until it is proven that you are guilty. As a result, you have a qualified right to be free (on bail) until a Court decides whe
Read more >

What to do when the police arrest you?

“This is the Police! Hands up! Do not move! You’re under arrest!” You have probably heard these being said by the police either through popular criminal drama shows on TV or perhaps you might ha
Read more >

Traffic Offences – Drink Driving

Here at AH2 Legal, we have noticed that most of our Clients commonly approach us to assist in representing them in Court for traffic offences including drink driving offences. In Western Australia, if
Read more >

End of COVID-19 Rental Moratorium

The Residential Tenancies (COVID-19 Response) Act 2020 (the Act) had put into place a moratorium on evictions and other measures relating to residential tenancies to address the financial impacts of C
Read more >

Statutory Demand

We at AH2 Legal often get queries from clients about bad debts that are owed by companies in the course of business dealings. Clients often get frustrated when having to deal with collecting slow debt
Read more >

Tobacco Smuggling

We at AH2 Legal frequently get Clients who need our help in defending them against charges for Offences involving tobacco products including being in possession of large quantities of tobacco products
Read more >

Property Laundering and Dealing with Proceeds of Crime

Property (money) laundering involves hiding, disguising or legitimizing the true origin and ownership of money used in or derived from committing crimes. It is an extremely diverse activity that
Read more >

Common Assault

Common assault charges in Western Australia arise in cases where a person has sustained minor injuries or where a person has been threatened. This offence generally arises whenever a person is hit, pu
Read more >

Family Law – Loans and Property

With the current property market – costs of property have been increasing on an upward trend, pricing first home buyers out of the market simply because of the high costs associated with home owners
Read more >

DEBT AFTER DEATH

We at AH2 Legal get quite a lot of clients wondering what would happen to their debt after they die. There is a lot of misconception around the issue of debt after death and people thinking that if yo
Read more >

Property Settlement After A Separation or Divorce

Who gets what when things don’t work out? Here at AH2 Legal, we often get asked by our clients to help with their determination of what they should get in terms of property after a separation or div
Read more >

Family Violence Restraining Order (FVRO)

Family violence is defined as violent, threatening or other behaviour that coerces or controls another family member or causes them to be fearful. Some examples of behaviour that constitutes family vi
Read more >

How to recover a debt that is more than $10,000?

In our previous article, we have talked about what you should do when a debt amount is less than $10,000. But what if the debt amount is more than $10,000? General Procedure Claim The Magistrates Cour
Read more >

WA Commercial Tenancies Code of Conduct

The WA Government has now finalized the Commercial Tenancies Code of Conduct for WA by gazetting it in the Commercial Tenancies (COVID-19 Response) Regulations 2020 (the Code). The Code comes into eff
Read more >

Debt Collection (1) – How to collect your debt?

Have you loaned money to a good friend, to an ex-partner, or even a family member and you now realise that you will never see your hard earned money again? Maybe you were involved in a minor car accid
Read more >

COVID-19 pandemic and its impact on Corporations Law

We are currently living in extraordinary times and require extraordinary measures to help combat the effects of the COVID-19 pandemic. This on-going pandemic is causing unimaginable havoc on not only
Read more >

COVID-19 Pandemic’s impact on Commercial Landlords and Tenants

On 7 April 2020, the Australian National Cabinet comprised of all Australian State or Territory’s Premiers or Chief Ministers and the Prime Minister of Australia announced its National Code of Condu
Read more >

Western Australia Border Lockdown

The Western Australian Government has moved to implement its harshest border restrictions yet, by locking down its borders for the first time in history as it tries everything to stop COVID-19 from sp
Read more >

Covid-19 (Coronavirus) and its impact on Businesses and Tenants

With the current Covid-19 (Coronavirus) pandemic increasingly affecting the health and livelihoods of so many people, it is inevitable that the economic impact of the pandemic will hit businesses hard
Read more >

THREE WORKERS’ COMPENSATION CLAIM OUTCOMES THAT YOU NEED TO KNOW

Once you have lodged your claim for workers’ compensation, you will then need to wait for the insurer to decide if your workers’ compensation claim is successful. After submitting the required doc
Read more >

Understanding Your Workers’ Compensation Claims Process

It can be a very traumatising time and frustrating process when you are injured at work and have to navigate through the various procedures to get what you are entitled to. We at AH2 Legal regularly d
Read more >

All You Need to Know About Workers’ Death Compensation

According to the Workers’ Compensation and Injury Management Act 1981 (WA), a family member who is wholly or partially dependent upon financial support from a deceased worker who died as a result of
Read more >

5 Step Guide to Workers’ Compensation

  1. What is Workers’ Compensation? Workers’ Compensation is basically financial compensation provided to workers who get injured or ill from work. Regardless of who was at fault to cause the
Read more >

Probate and Letters of Administration

What is Probate? Probate is the process of proving and registering in the Supreme Court of Western Australia, the last Will of a deceased person. When a person dies, somebody has to deal with their es
Read more >

Parenting or Children’s Issues

At AH2 Legal, we are able to provide you with in-depth legal advice in relation to children’s issues. When it comes to separation or divorce and children’s issues, there is a presumption at la
Read more >

Separation, Divorce, and Children’s Wishes

Separation, Divorce, and Children’s Wishes How Children’s Wishes are Weighed Against Best Interest The one question all parents ask themselves when separating or going through a divorce is –
Read more >

Did You Know That You Can be Fined for Eating While Driving?

Millions of people drive on our roads each and every day and a significant percentage of those people eat or drink while driving in their cars. As a result of people’s busy lives,  it may seem that
Read more >

Workers’ Compensation

How do I make a workers compensation claim? If you have sustained an injury in the course of employment, you must undertake the following steps: Step 1: notify your employer of the injury as soon as p
Read more >

Buying a Business – Lease Documentation Review and Settlement

In our previous article, we talked about the importance of contract review and business evaluation in the context of  buying a business. In this article, let’s find out more about what we should do
Read more >

Buying a Business – Contract Review and Business Evaluation

Buying a Business Settlement of a business is the process of transferring a business from one owner to another, usually between a Seller and a Buyer. There are various tasks that must be completed bef
Read more >

What is Domestic & Family Violence (3)

Many people ask us the question of how family violence affect their application for a Partner visa. It is important to understand that you do not have to stay in an abusive relationship to stay in Aus
Read more >

What is Domestic & Family Violence (2)

Do you need a Family Violence Restraining Order (FVRO)? You will need to apply for a FVRO if you require protection from a person with whom you are, or were, in a family relationship – e.g. marr
Read more >

What is Domestic & Family Violence? (1)

What is family and domestic violence? Under the Family Law Act 1975 (Cth), family and domestic violence is defined as behaviour which results in physical, sexual and/or psychological damage, forced so
Read more >

Separation, Divorce, and the Division of Property

Separation, Divorce, and the Division of Property When a couple realises that their relationship or marriage is over and then decide to separate or divorce, it is likely to be the most emotionally int
Read more >

SEPARATION CHECKLIST: TOP 12 PRACTICAL THINGS TO CONSIDER

Here at AH2 Legal, we always get asked questions from people who are separating from their partners about what to do in their situations. From our years of experience, apart from giving advice on the
Read more >

Loans to Children

In our last article, we talked about how parties can better protect their assets prior to entering a de facto relationship or marriage through the use of a Binding Financial Agreement or “Pre-nuptia
Read more >

Some Facts on Marriages and Divorces

118,401 marriages registered and 46,604 divorces granted in Australia in 2016 Average length of marriages that end in divorce is 12.1 years 1 in 3 marriages will end in divorce 1 in 5 will marry more
Read more >