Commercial Lease Agreements: What Not to Include

Signing a commercial lease is one of the biggest commitments a Queensland business will make. The terms of your lease have the potential to affect your financial health and business flexibility for years.

This is why it’s important to understand not only what should be in your lease, but also what shouldn’t.

An experienced commercial lease lawyer can help you identify risky clauses that may expose you to unfair costs or restrictions. Here are some of the most common red flags to look out for.

Common Problem Clauses in QLD Leases

1. Excessive rent increase clauses

Rent reviews are standard, but some landlords include unreasonable increases. Examples include linking rent to the Consumer Price Index plus an additional percentage, or imposing fixed annual hikes above market growth. These terms can make your premises unaffordable after a few years, which limits your ability to plan for the long term.

2. Unclear maintenance and repair obligations

Ambiguity about who pays for repairs is a classic trap in a commercial property rental contract.

A lease that shifts structural repair or major maintenance costs onto the tenant is a red flag. As the tenant, you should only be responsible for day-to-day upkeep, not fixing the roof or replacing the air conditioning system. Your agreement needs to specify this or you could end up with a dispute on your hands.

3. Unfair termination clauses

Some leases give landlords broad powers to terminate early, while offering little protection for tenants. For example, a landlord might include a clause that allows them to terminate if they receive a better offer.

Without balance, these clauses create instability and jeopardise your investment in fit-outs, staffing and marketing.

Review the termination terms in your agreement or ask an expert in commercial leasing in QLD to review them before you sign.

4. Restrictions on assignment or subleasing

Your business needs may change, and the ability to assign (transfer the lease to a third party) or sublet the premises provides flexibility. Clauses that block or heavily restrict assignment can leave you stuck in a location or paying rent for a space you no longer use. A fair lease should allow assignment or subletting, with the landlord’s reasonable consent.

5. Hidden fees and outgoings

Tenants should always check for hidden costs such as insurance levies, marketing contributions or mandatory fit-out costs. Outgoings should be clearly defined and transparent. Uncapped or vague charges can significantly increase your total occupancy costs greater than the headline rent.

6. Personal guarantees

Many landlords request personal guarantees, particularly with small business tenants. This means if your business cannot meet its obligations, your personal assets could be at risk. While sometimes unavoidable, the scope of personal guarantees should always be carefully reviewed and, where possible, limited.

Read more: What is a personal guarantee in commercial leasing?

7. Complicated or unfair exit clauses

Exit clauses define how you can leave the lease before the end of its term. In many leases, these are heavily weighted in favour of the landlord, with penalties that can include paying out the remainder of the lease, covering re-letting costs or restoring the premises to its original condition at your expense.

When you’re the tenant, overly strict exit clauses can remove flexibility if your business needs change. Negotiating more balanced terms like capped penalties or clear handover obligations, will help protect you from unexpected costs and give you greater control over your long-term strategy.

Why Are These Lease Clauses Problematic

Unfavourable lease terms can affect the viability of your entire business by causing:

• Financial strain: Escalating rent or surprise fees eat into profits and reduce cash flow.
• Reduced flexibility: Restrictions on subleasing or assignment limit your options to move on if you need to.
• Legal exposure: Personal guarantees or vague repair obligations could expose you to unanticipated liabilities.
• Business risk: Unfair termination clauses undermine your ability to build a stable, long-term presence.

A commercial lease lawyer can protect your interests

A lease is a legally binding contract so you need to be careful before you sign. Having it reviewed by a commercial lease lawyer from NPR Law ensures you know exactly what you’re agreeing to and gives you the chance to negotiate fairer terms.

QLD-Specific Rules You Should Know

In Queensland, the Retail Shop Leases Act 1994 (Qld) outlines key disclosure obligations, rent review limits, and tenant protections for retail premises, with most lease disputes resolved through QCAT mediation.

How a Commercial Lease Lawyer Can Help

• Review lease terms by checking for compliance with Queensland leasing laws and identifying risky clauses.
• Negotiate adjustments by working with the landlord or their solicitor to balance terms and protect your position.
• Clarify obligations and ensure responsibilities for repairs, outgoings and guarantees are fair and transparent.
• Safeguard long-term interests, with lease terms that allow for growth, flexibility and stability.

With professional advice, you can avoid expensive mistakes and focus on building your business with confidence.