Commercial Lease Questions for a Small Business Before Signing

Key takeaways

Send the complete transaction, not one PDF

Give the lawyer the documents that create or influence the commitment:

• advertisement, listing and property plan;
• offer to lease, heads of terms, letter of intent and every signed or accepted version;
• draft lease, schedules, house or centre rules and addenda;
• landlord, agent and property details;
• tenant company records and internal approval;
• deposit, guarantee and suretyship wording;
• fit-out proposal, quotations, drawings and landlord contribution terms;
• finance, franchise, licence, supply or sale-of-business agreement linked to the location;
• operating budget, expected opening date and break-even assumptions; and
• material emails, messages and meeting notes.

Label what is draft, signed, paid, accepted or still under negotiation. A lawyer cannot safely answer “May I walk away?” without the offer, acceptance trail, authority, conditions and payment record.

The commercial-law hub supplies the wider contract context. This guide owns the prospective tenant's pre-signing question list.

1. Have we already made a commitment?

Ask the lawyer to identify every document or message that could record agreement. An “offer”, “reservation”, deposit request or heads of terms may contain binding provisions or may form part of a later acceptance dispute. The label alone does not decide its effect.

Request a written status map:

• what has been offered and by whom;
• whether and how it could be accepted;
• conditions that must still occur;
• which terms are expressly non-binding, if any;
• whether the final lease is a condition or merely a fuller record;
• whether money paid is refundable and on what trigger; and
• which conduct could be treated as approval, possession or performance.

Pause further signatures, fit-out orders and non-refundable payments until the status is clear.

2. Are the parties, property and signatories correct?

The tenant name must match the entity intended to operate and carry the liability. Reconcile the registered name and number through the current CIPC enterprise enquiry. Decide whether the tenant is the operating company, a new company, a close corporation, partnership, sole proprietor or another entity.

Ask:

• Who owns or is entitled to let the premises?
• If an agent signs, what mandate supports that authority?
• Is the landlord an individual, company, trust or another arrangement, and are its signatories identified correctly?
• Who may approve and sign for the tenant under its governance records?
• Does the transaction require a board, member, partner, trustee, franchise or funder approval?
• Is any director, shareholder, spouse or related business also signing a guarantee or suretyship?

Keep the company lease and every personal-security document separate. Signing “for the company” does not answer whether another page creates personal liability.

3. What space and rights are actually included?

The premises description should reconcile with the plan and physical inspection. Record the unit, floor, measured area, boundary, entrances, loading areas, parking, storage, signage, service yards, common areas and any exclusive or shared rights.

Ask how rent or operating costs change if the measured area differs. Confirm whether the landlord may relocate the tenant, change access, alter common areas or carry out disruptive work. For a multi-tenant site, review rules governing deliveries, trading hours, noise, waste, security, customers and contractors.

Photograph the premises and prepare a dated defect and services list before commitment. Marketing images and verbal assurances should not replace the agreed description, handover condition and remedy.

4. May the business lawfully and practically operate there?

The permitted-use clause should describe the actual business without being unnecessarily narrow. Compare it with the operating plan, products, equipment, customer access, employees, deliveries, storage, extraction, power, water, data, noise, waste and hazardous-material requirements.

Ask which party must obtain and maintain:

• zoning, land-use or municipal approval;
• occupancy or building approvals;
• fire, health, liquor, environmental or sector-specific permissions;
• body-corporate, owners' association or centre consent;
• signage and advertising approval; and
• alterations, equipment and utility approvals.

Do not accept “the tenant must obtain everything” without deciding what happens if the intended use cannot be approved. Consider a precisely drafted condition, information warranty, cooperation duty, long-stop date and exit or refund mechanism. The required approvals vary by premises, municipality and business.

5. When do possession, fit-out and rent begin?

Separate at least four dates: access, beneficial occupation or fit-out, handover, and rent commencement. They may not be the same.

Ask the lawyer to align:

• landlord works and completion standard;
• tenant works and approval process;
• access for designers, contractors and equipment;
• the condition report and snag process;
• utility capacity and meter activation;
• opening obligations and trading date;
• rent-free or reduced-rent period;
• delay, extension and cancellation triggers; and
• risk, insurance and security during fit-out.

If the business depends on a funder, franchise approval, equipment delivery or licence, the lease dates must work with those dependencies. A rent-free fit-out period is not cost-free if operating charges, utilities, insurance or security already run.

6. What is the all-in occupancy cost?

Build a month-by-month model for the full proposed term and every renewal scenario. Distinguish:

• base rent and escalation dates;
• VAT treatment and invoice basis;
• rates, taxes, levies and operating costs;
• water, electricity, refuse, sewerage, gas, backup power and data;
• parking, signage, storage, security and marketing charges;
• meter, reading and estimation method;
• turnover rent or reporting obligations;
• fit-out, reinstatement and maintenance reserves; and
• deposits, guarantees, insurance and professional costs.

Ask which amounts are fixed, estimated, variable or passed through from a third party. Require a calculation method, supporting statement, allocation basis, reconciliation period, query process and correction mechanism. Model a high-usage and delayed-opening scenario rather than relying only on the first month's rent.

The commercial-law checklist can hold the wider transaction record; this review should attach the lease-specific cost model.

7. What security is being given?

List the deposit, bank or parent guarantee, suretyship, pledge, cession and any landlord lien wording separately. For each item record:

• provider and beneficiary;
• amount or exposure cap;
• event allowing a demand;
• whether liability is primary, accessory, continuing or unlimited;
• notice and cure rights;
• expiry and release evidence;
• replacement requirements after a draw; and
• what happens on renewal, assignment, sale or termination.

Do not import residential deposit assumptions. The Rental Housing Act defines its lease framework by reference to a dwelling for housing purposes. A commercial deposit, interest obligation, inspection process and release mechanism must be checked under the actual contract and applicable law.

8. Who repairs, replaces and certifies each system?

Allocate responsibility item by item: structure, roof, waterproofing, doors, glass, plumbing, drainage, electrical supply, HVAC, fire systems, lifts, backup power, security, common areas, tenant equipment and internal finishes.

Ask:

• What condition must exist at handover?
• Which latent or pre-existing defects remain the landlord's risk?
• What maintenance standard and service record are required?
• Who pays for capital replacement versus routine servicing?
• May the landlord enter, repair and recover cost from the tenant?
• What notice applies to planned or emergency access?
• What remedy applies when services fail or the premises cannot be used?

Match the insurance clauses to this allocation. Avoid a position where the tenant carries maintenance, replacement, interruption and uninsured-loss risk for a system it does not control.

9. What happens to the fit-out?

Record every alteration, fixture and landlord contribution. The lease should address approvals, plans, contractors, compliance evidence, ownership, damage, access, insurance, cost overruns, removal and reinstatement.

Ask whether an item becomes the landlord's property, may be removed, or must be removed. Price the end-of-term reinstatement obligation before signing. If the landlord contributes to fit-out, identify the payment milestones, documents, tax treatment, clawback and consequences of early termination.

Do not begin work from an email approval if the lease requires a different written process or specified signatory.

10. Which risk, indemnity and insurance clauses are disproportionate?

Map each loss to the party that controls the source and to available insurance. Review exclusions of liability, indemnities, waivers, consequential-loss clauses, customer injury, employee injury, property damage, business interruption, utilities, security, theft and force-majeure wording.

Consumer Protection Act coverage is not automatic merely because the tenant is a small business. Section 5 contains scope rules and a juristic-person threshold, while section 14 expressly does not apply to transactions between juristic persons regardless of turnover or asset value. Where the Act does apply, sections such as 48 and 49 may affect unfair terms and conspicuous risk or liability notices. The parties, transaction and current threshold must be checked before relying on a consumer remedy.

Ask the lawyer and broker to reconcile the lease insurance duties with actual policies, limits, exclusions, deductibles and certificates. Contract wording does not create unavailable cover.

11. Do the term, renewal and exit dates work for the business?

Compare the lease term with finance, franchise, licence, equipment, employment and supply commitments. Record the initial expiry, every option, notice window, rental-setting mechanism, conditions for renewal and the permitted delivery method.

The Constitutional Court's decision in Beadica 231 CC v Oregon Trust arose from commercial leases connected to ten-year franchise arrangements. The lease renewal options required written notice at least six months before the initial term ended. The majority refused, on those facts, to relieve the applicants from their late non-compliance. The case does not make every renewal clause valid or every late notice fatal, but it demonstrates why a business should not expect a court to repair a missed option.

Calendar the opening and final date for every option, add earlier internal approval dates and preserve delivery evidence. Test the proposed renewal rent formula before signing.

12. Can the business transfer, sublet or change ownership?

A small business may sell, restructure, bring in an investor, change control, move operations or sublet unused space. Ask whether the lease restricts assignment, subletting, sharing occupation, franchise changes, mergers, ownership changes or a sale of business.

Identify the consent standard, information required, response period, costs, conditions and release of the original tenant and sureties. A transfer that leaves the old entity or surety liable is not a clean exit.

13. What counts as default, and what follows?

Read default and remedy clauses as an event sequence. Separate monetary breach, other breach, insolvency or business-rescue events, abandonment, illegal use, insurance failure and cross-default under another agreement.

Ask:

• What notice and cure opportunity applies to each event?
• Which amount may be accelerated or recovered?
• When may access, services or trading be affected?
• What interest, legal cost or collection term applies?
• When may the lease be cancelled?
• What happens to the deposit, fit-out and stock?
• What occupation charge applies after termination?
• Which court, arbitration or other process is specified?

The breach-of-contract glossary explains the basic concept. If a dispute already exists, the commercial-dispute service is the separate post-breach route.

14. Are notice and electronic-signature mechanics usable?

Check the domicilium, physical and email addresses, permitted delivery methods, deemed-receipt rules, authorised representatives and update process. Renewal, breach, option and consent notices may have different formalities.

The Electronic Communications and Transactions Act gives legal recognition to data messages and contains electronic-signature rules. It does not mean every typed name, platform click or email signs every lease for every party. Ask the lawyer to confirm the required signature method, authority, agreed platform, counterpart process, final version, timestamp and evidence of delivery and acceptance.

Keep one immutable signed pack containing the lease, schedules, plans, rules, suretyships and attachments. A signature page separated from the reviewed version is a preventable evidence risk.

15. What must the lawyer deliver before signature?

Agree the review scope in writing. Request:

1. a binding-status assessment of the offer and payment trail;
2. an issues list ranked as stop, negotiate, price, verify or accept;
3. a marked draft showing proposed wording;
4. a schedule of missing facts, approvals and documents;
5. a cost and security reconciliation;
6. a term, option, notice and long-stop calendar;
7. a list of linked agreements that must align; and
8. a final execution checklist naming each signatory and attachment.

Verify the practitioner through the LPC search before sharing a complete financial or corporate file. The Lexuno lawyer directory is a discovery route, not regulatory proof or a promise of availability.

The signing decision should identify remaining assumptions. If permitted use, approval, total cost, handover condition, security exposure, renewal or exit remains material and unresolved, record it as a stop condition or negotiate a precise condition—not a hope that the issue will be solved after occupation.

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