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Commercial Leases

Contributed by SulifaTonga, KirstyGrainger and DavidQin, as amended by Emanuel Masimo and current to February 2025

Most businesses operate from premises leased from a landlord. A person signing a commercial lease should read the document closely and seek legal advice before signing it.

The Business Tenancies (Fair Dealings) Act 2003 (NT) (BTFDA) governs most commercial leases in the Northern Territory. The protections afforded by the BTFDA do not apply universally; they depend on a range of factors including the premises and business being conducted on the premises.

Commercial leases are signed for a particular period of time ending on a specific date. A lease typically cannot be broken before that date without incurring a liability, unless the landlord and tenant both agree. Unless the tenant has an express right of renewal, it is generally at the discretion of the landlord whether to offer a lease renewal.

A lease should specify the agreed arrangements for paying rent. It should also state any additional payments the tenant may have to pay, such as council rates, water rates, building insurance, and costs of preparing the lease. Some shopping centres generally have additional requirements, such as a contribution towards promotions, security and building improvements, and these should be included in a lease. Stamp duty is generally not payable on leases in the NT, unless valuable consideration is given for the lease (in addition to or other than rent).

Questions a potential tenant should ask before signing a lease include:

• who will be responsible for maintaining the structure, fixtures, fittings, equipment and chattels?
• who will be responsible for removing the fit outs and fixtures in the premises at the end of lease?
• who is responsible for the legal costs of drawing up the lease?
• do the premises have the right zoning?
• what is the duration of the lease? Can it be renewed?
• who is responsible for outgoings such as rates, water, sewerage, gardening, air-conditioning charges and so on?
• what types of insurances are required for the premises?
• is there a relocation or demolition clause, where during the term of the lease you may be required to relocate elsewhere, in the lease?

A person should not sign a lease unless they agree to all the conditions contained within the lease.

In the context of buying a business, the buyer should ensure that they enter into a deed of assignment of lease that clearly absolves them of any liabilities incurred by the previously tenant prior to the assignment of the lease.

Resources

• NT Consumer Affairs (NTCA): Provides resources on business tenancies: Northern Territory Consumer Affairs.