Commercial Leasing Series: Critical issues when a lease ends

August 24, 2020

There are various reasons why your lease can come to an end, including the following:

• The lease term has expired;
• The Landlord has chosen to exercise their right to demolish or redevelop the premises;
• The Tenant transfers, assigns or sublets their interest in the lease to another party;
• The Landlord and Tenant negotiate a surrender of lease; or
• Either the Landlord or Tenant have materially breached the lease terms entitling the other party to terminate the Lease.

Parties should be aware that even if a lease does not contain an option to renew, if the lease is a Queensland Retail Shop Lease the Landlord must give the Tenant written notice within the appropriate time before the expiry of the lease or the Tenant may be entitled to renew the lease for at least another 6 months.  See our earlier Commercial Leasing Series publications for more information.

The main issues that arise when a lease comes to an end include:

• When must the Tenant vacate the premises and remove all of its property?
• Does the Tenant owe the Landlord any money under the lease such as rent arears or outgoings, and if so, what arrangements will be made to ensure it is paid?
• What is the extent of the Tenant’s make good obligations?
• Do the premises need to be stripped to a bare shell, or does it need to be returned to what it was like when the Tenant first took occupation – is there a condition report that can be referred to?
• Is there any damage to the premises and if so, who caused it and who is responsible for repairing the damage?
• When must the Landlord return the bank guarantee or security deposit to the Tenant? And are there any circumstances that enable the Landlord to withhold part, or all, of that bank guarantee or security deposit?

These questions can be answered by a review of the circumstances and your obligations under the lease. If you have any questions about your obligations at the end of your lease, please contact a member of our Property team at Fox and Thomas.