Commercial leases are a common reality in running a business, but when things go wrong, disputes can cause unnecessary stress.
At Flint, we regularly assist landlords and tenants with lease disputes. The good news?
Most issues can be prevented or resolved early, long before they escalate to a tribunal or court. Here’s a practical guide to the most common triggers and how to avoid them.
Common Causes of Commercial Lease Disputes
Unpaid Rent or Rent Disputes
It’s no surprise that rent issues top the list, whether it’s unpaid rent, disputes over increases, or disagreements during market rent reviews. Ambiguous clauses or informal rent arrangements are often at the heart of these problems.
Tip: Landlords do your due diligence before entering into a lease. Request references if possible and look into the proposed tenant’s financial standing. Use clear, written clauses for rent review timing and methods (e.g. CPI, fixed %, or market). If rent is late, address it early and in writing.
Outgoings and Unexpected Charges
Commercial leases typically pass on property-related expenses to the tenant. But disputes often arise when outgoings are under-disclosed, poorly explained, or inconsistent with the lease.
Tip: Landlords should provide clear outgoings estimates and annual reconciliations. Tenants should seek clarification on what’s included and negotiate caps where appropriate. If the lease is a retail lease and subject to the relevant state-based legislation, failing to properly disclose outgoings or expenses can lead to certain parts of the lease being unenforceable or give the tenant termination rights.
Maintenance and Repairs
Who pays for what? Tenants are usually responsible for internal maintenance, while landlords cover structural issues, but without clear terms, it becomes a grey area.
Tip: Spell out responsibilities clearly in the lease. Don’t rely on assumptions. Use terms like “structural repairs” and “fair wear and tear” with care. Tenants should make it clear that they have no responsibility for structural repairs (which can also in the best interests of the Landlord!).
Make-Good Obligations at Lease End
End-of-lease obligations can become costly and contentious, especially when there’s no agreed-upon condition report or clarity around what “make good” means.
Tip: Agree upfront whether the premises must be returned to original condition, “clean and tidy,” or to a base building standard. Document the condition at lease start (with photos). Tenants should make it clear that the lease ends on the agreed termination date, and doesn’t drag on until they have satisfied the landlord that they have left the premises as required.
Fit-Out and Alteration Disputes
Installing or removing fit-out without written consent can trigger claims for breach or restoration costs.
Tip: Always seek (and give) written consent for alterations. Clarify whether fit-out remains with the premises or must be removed at lease end.
Early Termination
Trying to terminate a lease early — whether due to breach, insolvency, or hardship — can expose parties to claims for repudiation or wrongful eviction.
Tip: Follow the lease’s termination procedure. Landlords must issue formal breach notices. Tenants considering exit should seek legal advice before abandoning the lease.
Final Thoughts
Most commercial lease disputes stem from preventable misunderstandings. Whether you’re a landlord or a tenant, the key is clarity, communication, and timely action. If you’re facing a disagreement or want help reviewing your lease, our team is here to help.
Need advice on a lease issue?
Reach out to the Flint team. We’re here to make leasing simpler and disputes less stressful.
Disclaimer
Legal Information Only
The information on our website is general and is not legal advice. We put lots of work into making our content insightful but it may not apply to your personal circumstances. We’re more than happy to help with your individual issues – just reach out.