DIY Lease Risks for NSW Landlords: Why Professional Drafting Protects Your Investment

Main Content: Why Lease Drafting Quality Matters

Commercial and retail leases aren't just paperwork - they're long-term legal agreements that define who's responsible for what, how costs are handled, and what happens when expectations don't align. When a lease is drafted clearly and comprehensively, both landlord and tenant can focus on the business relationship. When it's vague or incomplete, misunderstandings are almost inevitable.

I've worked with landlords who thought their lease protected them, only to discover during a dispute that the lease terms didn't actually reflect the characteristics and realities of their property. The template or old lease they'd used simply didn't account for how their particular premises actually functions.

Real-World Example: When Standard Terms Don't Fit Property Characteristics

Consider a landlord leasing commercial space in a converted heritage building. The property had shared plumbing and electrical systems serving multiple tenancies, 40-year-old HVAC equipment, heritage restrictions on external modifications, and unmetered water supply.

The landlord used a template commercial lease with standard provisions: "tenant responsible for internal maintenance," "tenant pays proportionate share of outgoings," "alterations with landlord consent," and "restore to original condition at lease end."

Problems emerged quickly. The aging HVAC system failed - the template said the tenant maintained internal equipment, but this shared building system served multiple tenancies. Was replacement a tenant or landlord cost? The lease didn't address shared system characteristics.

Water costs were significant because the tenant ran a café with substantial water usage. The template allocated costs by floor area, but the tenant argued this was unfair given disproportionate usage. The lease terms didn't account for unmetered supply characteristics.

The tenant wanted new signage, but heritage restrictions limited options regardless of the template's "consent not unreasonably withheld" clause. At lease end, "restore to original condition" created major disputes about what this meant for a 40-year-old property with visible existing wear.

These disputes resulted from lease terms that didn't account for property characteristics: shared systems, aging equipment, heritage constraints, cost structure, and existing condition. Properly tailored lease drafting would have addressed these characteristics upfront, preventing the disputes entirely.

When Lease Terms Don't Match Your Property's Characteristics

The fundamental problem with template leases and recycled old agreements is that they contain standard terms written for generic situations. They don't consider the specific characteristics of your property and how those characteristics should shape lease provisions.

Your property's physical characteristics matter. Is it an older building requiring more maintenance? Does it have shared HVAC or plumbing systems? Are there common walls with adjoining tenancies? Is the space subdivided with internal demising walls? Does it have heritage features or structural limitations? These physical realities should directly influence maintenance obligations, alteration permissions, and repair responsibilities in the lease - but template leases use one-size-fits-all clauses.

Your property's operational characteristics matter. Does it share access with other tenancies? Are there common areas that need management and cost allocation? Does it have shared loading facilities or waste management? Are there parking limitations or competing demands for spaces? Are utilities separately metered or shared? How these operational aspects work should shape the lease terms about access, costs, and tenant responsibilities - but templates can't address specifics they don't know about.

Your property's condition and age matter. A brand new fit-out has different maintenance implications than a 30-year-old space. Aging equipment, worn flooring, dated fixtures - these existing conditions should affect what maintenance the tenant takes on, what repairs are landlord responsibilities, and what "make-good to original condition" actually means. Template leases use generic maintenance clauses that don't account for your property's actual state.

I see this disconnect regularly. A landlord uses a template lease with standard maintenance and repair clauses. The premises has particular characteristics - shared services, older equipment, common facilities - that create specific responsibilities and costs. The template lease terms don't address how these characteristics actually work. Disputes become inevitable when the standard lease terms don't fit the property's reality.

The Real Cost of Generic Lease Terms

A template lease might have professionally-drafted clauses about maintenance, outgoings, and alterations. But if those clauses don't account for your property's actual characteristics, they create problems rather than preventing them.

Maintenance and repair terms that don't fit the property:

• Standard "tenant maintains interior" clauses don't address shared building systems, aging equipment, or structural issues common in older premises
• Generic repair obligations don't consider whether fixtures and fittings are new or near end-of-life
• Template maintenance schedules don't reflect the actual servicing needs of your property's specific equipment and systems

Outgoings provisions that don't match how costs actually arise:

• Standard outgoings clauses don't address properties with shared services where usage can't be separately metered
• Template cost recovery provisions don't account for common areas with unequal benefit to different tenants
• Generic outgoings definitions don't reflect the actual cost structure of your particular property

Alteration and fit-out terms that ignore property limitations:

• Standard alteration clauses don't address structural limitations, heritage constraints, or shared infrastructure that affect what changes are feasible
• Template fit-out provisions don't consider existing condition, required upgrades, or coordination needed with adjoining tenancies

Make-good obligations that don't reflect property realities:

• Generic "restore to original condition" clauses don't account for the premises' actual age and condition at lease commencement
• Standard make-good terms don't address the practical reality that some tenant improvements may enhance or be necessary for the property

These aren't minor issues. When lease terms don't match property characteristics, every maintenance issue, cost recovery, or alteration request becomes a potential dispute about whether standard lease clauses actually apply to your specific situation.

Would you like to ensure your lease terms actually fit your property's characteristics? Let's work through the specifics together.

Common Gaps When Lease Terms Don't Reflect Property Characteristics

Let's look at what happens when landlords use template leases or recycle old agreements that don't account for their property's specific characteristics and how those characteristics should shape lease terms.

Standard Maintenance Terms Don't Address Property-Specific Realities

Template leases typically have standard clauses like "tenant responsible for internal maintenance and repairs" or "landlord maintains structure and exterior." These generic terms don't account for how your particular property actually functions.

Properties with shared building systems need specific allocation of responsibilities. If your HVAC, plumbing, or electrical systems serve multiple tenancies, who maintains what components? Who pays when shared equipment needs servicing or replacement? How are emergency repairs coordinated when they affect multiple tenants? Template maintenance clauses don't address these shared system realities.

Older properties have different maintenance dynamics than new ones. If the premises has 20-year-old equipment, worn flooring, or aging fixtures, standard "tenant maintains in good condition" clauses create unreasonable expectations. The lease needs maintenance terms that account for the property's age and existing condition - what's reasonable maintenance versus what's actually replacement of aging components that's a landlord responsibility.

Properties with common areas need clear allocation of maintenance responsibilities and costs. Who maintains shared corridors, bathrooms, loading areas, or outdoor spaces? How are these costs recovered? If some tenants benefit more from certain common areas than others, how is that reflected in cost allocation? Template outgoings clauses typically don't address these nuances.

I've worked with landlords whose template lease created ongoing disputes because maintenance obligations didn't account for shared systems, aging equipment, or common facilities. Every repair issue became an argument about who was responsible because the lease terms didn't reflect how the property actually works.

Standard Outgoings Terms Don't Match How Property Costs Actually Arise

Most template leases have standard outgoings definitions and recovery mechanisms. But how costs arise in your property depends on its specific characteristics.

Properties with shared but unmetered services can't use standard "tenant pays proportionate share of actual costs" provisions when you can't measure individual usage. If water, gas, or electricity isn't separately metered to each tenancy, the lease needs terms that address how these shared costs are fairly allocated - not template clauses that assume separate metering exists.

Properties with unequal common area benefits need cost allocation that reflects actual usage patterns. If some tenants have extensive frontage or exclusive use of certain common areas while others don't, standard "proportionate to leased area" formulas may not be fair. The lease terms need to account for your property's specific layout and how different tenancies actually use shared spaces.

Properties with variable cost profiles need outgoings provisions tailored to what costs actually occur. Some properties have significant landscaping and external maintenance costs; others have complex building management systems; some have intensive security or waste management needs. Template outgoings clauses often use generic categories that don't match your property's actual cost structure.

When outgoings provisions don't reflect property characteristics, you end up in disputes about what's recoverable, how costs should be allocated, and whether the formula used is actually fair given the property's realities.

Standard Alteration Terms Don't Account for Property Limitations and Characteristics

Template leases typically say something like "tenant may make non-structural alterations with landlord consent, not to be unreasonably withheld." This generic language doesn't address your property's specific characteristics that affect what alterations are feasible or appropriate.

Older buildings with structural constraints need alteration clauses that address these limitations upfront. If your property has limited load-bearing capacity, heritage features, or shared structural elements, the lease should specify what types of alterations simply aren't possible - not leave this for dispute when the tenant proposes changes.

Properties with shared infrastructure need alteration provisions that address coordination requirements. If any alterations could affect adjoining tenancies' access to services, shared systems, or common areas, the lease needs terms about approval processes, impact assessments, and protection of other tenants' interests.

Properties with specific compliance requirements need alteration clauses that reference these constraints. If your building has heritage overlays, environmental requirements, or specialized approvals that affect what changes can be made, these limitations should be clear in the lease terms.

I see problems when tenants propose alterations that seem reasonable based on generic lease clauses, but aren't actually feasible given the property's characteristics. Clear lease terms that account for property-specific constraints prevent these situations.

Make-Good Terms Don't Reflect Property Condition and Age Realities

"Tenant to make good and restore premises to original condition at lease end" - this template clause appears in countless leases. But what "original condition" means depends entirely on your property's actual state and characteristics.

Older properties with existing wear can't reasonably be "restored to original condition" as if they were new. If the premises had worn carpet, dated fixtures, or aging equipment at lease commencement, the lease needs make-good terms that account for this - not generic restoration language that implies like-new condition.

Properties where tenant improvements add value need make-good provisions that address this reality. If the tenant installs quality fixtures or makes improvements that enhance the property, does your generic "remove all tenant improvements" clause actually serve your interests? Sometimes retaining certain improvements benefits both parties - but template clauses don't address this scenario.

Properties with specific end-of-lease condition requirements need these documented clearly. If you need specific cleaning standards, repairs to particular areas, or restoration of certain features based on your property's actual characteristics and intended future use, generic make-good clauses won't capture this.

When make-good terms don't reflect property realities, end-of-lease disputes are almost guaranteed. The landlord expects restoration based on template language, the tenant points to actual property age and condition, and resolution becomes costly.

Ready to ensure your lease terms actually match your property's characteristics? Let's discuss how your premises actually functions and what lease provisions make sense.

Missing Landlord Protection Clauses

DIY leases often underweight landlord protections in favour of keeping things simple. This creates exposure when tenant circumstances change.

Personal guarantees ensure that if your corporate tenant defaults, you have recourse to the individual directors or shareholders. Without this protection, a tenant can simply wind up their company and walk away from lease obligations.

Security deposits or bank guarantees provide you with funds to cover unpaid rent, repair costs, or make-good obligations if the tenant doesn't fulfill them. Template leases may not specify adequate security amounts or may lack clear provisions about when and how you can access these funds.

Maintenance obligations need to be spelled out clearly - what's the tenant responsible for versus what you'll handle as landlord. Vague language like "tenant maintains premises" creates arguments about who should pay for particular repairs.

I've seen landlords discover too late that their lease doesn't give them the basic protections they assumed were standard. These provisions should be tailored to your property type and tenant risk profile.

Wrong Lease Classification

This is more common than you'd think. The difference between a commercial lease and a retail lease under NSW law isn't just semantic - it affects your legal obligations and the tenant's rights.

A retail lease falls under the Retail Leases Act 1994 (NSW) if the premises are used wholly or predominantly for retail purposes. This triggers specific disclosure requirements, minimum term provisions, and restrictions on rent review mechanisms that don't apply to standard commercial leases.

Using a commercial lease template for retail premises can put you in breach of these requirements. Using a retail lease template for commercial premises may give the tenant protections they're not entitled to and restrict your landlord rights unnecessarily.

The lease classification needs to match the actual permitted use of the premises.

Vague Make-Good and Repair Obligations

End-of-lease disputes over property condition are one of the most common problems I handle. The issue almost always traces back to vague or incomplete make-good clauses.

"Good condition," "fair wear and tear excepted," "tenant to restore premises" - these phrases sound clear until you try to apply them. What counts as fair wear and tear? Does "restore" mean remove all tenant improvements or leave functional ones in place? What standard of cleanliness and repair is "good condition"?

Without specific definitions and processes, you and your tenant can both be entirely reasonable people and still end up in complete disagreement about what's required at lease end.

Make-good provisions need to specify:

• What condition the premises should be in (often best done with a detailed schedule of condition at lease commencement)
• What alterations or improvements must be removed versus what should remain
• What repairs are the tenant's responsibility
• How you'll assess compliance and what happens if standards aren't met
• Clear timelines and processes for make-good completion

Ready to ensure your make-good obligations are documented clearly? Let's discuss your specific property situation.

How Professionally Drafted Leases Address Property Characteristics

A commercial lease lawyer doesn't just fill in a template. We draft provisions that account for your property's specific characteristics and how those characteristics should shape lease terms.

Understanding Your Property's Physical and Operational Characteristics

Professional lease drafting starts with understanding how your property actually functions - its physical condition, operational realities, and practical constraints.

We consider:

• Building systems and infrastructure - Are systems shared or separate? What's the age and condition of major equipment? How do utilities flow through the property?
• Physical condition and age - What's the current state of fixtures, fittings, and finishes? What's reasonable maintenance versus replacement of aging components?
• Shared facilities and common areas - What spaces or services are shared? How do different tenancies interact? How should access and costs be allocated?
• Structural and compliance constraints - Are there heritage restrictions, load-bearing limitations, or specialized requirements affecting what can be done with the space?
• Cost structure and drivers - How do outgoings actually arise in this property? What costs are usage-based versus fixed? How can costs be fairly allocated?

Tailoring Maintenance Terms to Property Realities

We draft maintenance and repair provisions that match your property's actual characteristics rather than using one-size-fits-all clauses.

For properties with shared systems, the lease specifies:

• Clear allocation of responsibility for shared versus tenant-specific equipment
• How shared system maintenance costs are divided and recovered
• Protocols for coordinating repairs that affect multiple tenancies
• Who handles emergency repairs and how costs are addressed

For older properties, maintenance clauses account for:

• The age and condition of existing equipment and fixtures
• What maintenance is reasonable given property age versus what's actually replacement
• Clear baselines for condition expectations based on actual state at commencement
• How aging building components are handled during the lease term

For properties with common areas, we document:

• Maintenance responsibilities for shared spaces and facilities
• How common area costs are calculated and allocated
• Whether allocation should be by area, usage, benefit, or another method that fits your property's realities

Drafting Outgoings Provisions That Match Your Property's Cost Structure

We create outgoings definitions and recovery mechanisms tailored to how costs actually arise in your property.

For properties with unmetered shared services, the lease addresses:

• How shared utility costs are fairly allocated when individual usage can't be measured
• Whether allocation should account for different business types and usage patterns
• Clear formulas that work for your property's specific service configuration

For properties where tenancies have unequal common area benefit, provisions consider:

• Whether standard floor area allocation is actually fair given usage patterns
• If some tenancies should pay more for certain common areas they predominantly use
• How to structure cost recovery that reflects actual benefit received

For properties with specific cost profiles, outgoings clauses:

• Define categories that match your property's actual cost structure
• Address whether certain costs should be shared differently than others
• Specify how variable versus fixed costs are handled

Creating Alteration Terms That Reflect Property Constraints

We draft alteration and fit-out provisions that account for your property's specific limitations and characteristics.

For properties with structural constraints, alteration clauses:

• Specify upfront what types of changes aren't feasible given the building's characteristics
• Address heritage restrictions, load limitations, or other constraints that affect approvals
• Set clear parameters for what alterations can be considered

For properties with shared infrastructure, provisions address:

• How alterations affecting shared systems or adjoining tenancies are assessed
• What approval processes and impact assessments are required
• How coordination with other tenancies or building management is handled

For properties with specialised compliance requirements, clauses reference:

• Specific approvals or restrictions that apply to this property
• Whether certain alterations trigger additional compliance obligations
• What documentation or professional certifications are required

Documenting Make-Good Based on Actual Property Condition

We create make-good provisions that reflect your property's real condition and characteristics, not template assumptions.

This includes:

• Detailed schedule of condition with photographs documenting actual state at commencement
• Clear definitions of what restoration means given the property's age and existing wear
• Specific requirements for removal or retention of tenant improvements based on whether they enhance your property
• Practical make-good standards that account for the premises' actual characteristics and intended future use

When lease terms match property characteristics, disputes about maintenance, costs, alterations, and end-of-lease obligations largely disappear. Both parties understand what's actually required because the lease provisions fit the property's reality.

Current Compliance

I stay current with NSW leasing law requirements, court decisions that affect lease interpretation, and best practices in commercial and retail leasing. Your lease reflects this current understanding, not what was standard practice when a template was created.

For retail leases, this includes proper disclosure documentation, compliant rent review provisions, and termination clauses that meet statutory requirements. For commercial leases, it means ensuring your provisions are likely to be enforced as written if tested.

Clear, Enforceable Language

Legal drafting isn't about making things complicated - it's about making expectations clear enough that disputes don't arise. When they do arise, properly drafted provisions give you a solid foundation for resolution.

We define terms that commonly cause arguments. We specify procedures and timelines. We address scenarios that templates often miss: what happens if the tenant wants to make alterations, how outgoings are reconciled, what notice is required for different purposes, how disputes will be handled.

This clarity benefits both parties. Your tenant knows what they're committing to, and you have confidence that your lease actually says what you think it says.

Real-World Example: When the Lease Doesn't Match the Deal

Consider a landlord leasing retail premises in a small shopping complex. The landlord and tenant discussed and agreed on several specific arrangements: the tenant would have exclusive use of two designated car parks, access to a shared storage room upstairs, and permission for illuminated signage subject to council approval. The rent included outgoings except for the tenant's own electricity usage.

The landlord used an old lease from a previous tenant to "save time." The lease had generic descriptions of the premises and standard template clauses about parking and services.

Two years into the tenancy, problems emerged. Another tenant started using one of the "designated" car parks because they weren't specifically identified in the lease. The tenant wanted to access the storage room during evening restocking, but the lease had no provisions about after-hours access to common areas. When council rejected the illuminated signage, the tenant installed non-illuminated signage and the landlord objected - but the lease only said "signage subject to landlord approval and council consent," without specifying what type.

Most frustrating was the outgoings dispute. The landlord received a large common area maintenance bill and tried to recover the tenant's share. The tenant argued that "rent includes outgoings" based on their original discussion and understanding - but the lease had template outgoings clauses that required the tenant to pay a proportionate share. The landlord couldn't remember exactly what had been agreed two years earlier.

None of these people were being unreasonable. They'd reached genuine agreement on specific terms - but the lease didn't document what they'd actually agreed. The template lease addressed none of the property-specific arrangements because it had been written for a different premises in a different situation.

This landlord spent considerable time and money resolving disputes that wouldn't have occurred if the lease had properly documented the property specifics and negotiated terms from the start.

These situations happen regularly when leases don't match the actual premises or agreement. Proper lease drafting prevents them by capturing the specifics of your property and your deal.

Action Summary & Next Steps

Here's how to protect your commercial or retail property investment through proper lease preparation:

For new leases:

• Engage a commercial lease lawyer before finalising tenant arrangements
• Identify your property's key characteristics: shared systems, age/condition, common facilities, compliance constraints, cost structure
• Consider how these characteristics should influence maintenance obligations, outgoings allocation, alteration permissions, and make-good requirements
• Ensure lease terms are tailored to how your property actually functions, not based on generic template assumptions
• Review the draft lease to confirm provisions make sense given your property's specific realities
• Don't rely on standard template clauses that don't account for property-specific characteristics

For existing leases:

• Have your current lease reviewed to identify where standard terms don't fit your property's characteristics
• Check if maintenance provisions account for shared systems, aging equipment, or common facility realities
• Assess whether outgoings clauses match how costs actually arise in your property
• Verify that alteration and make-good terms reflect your property's actual constraints and condition
• Consider updating the lease if standard provisions are creating ongoing disputes about applicability
• Document property characteristics clearly if you're varying lease terms

Red flags requiring immediate attention:

• Your lease has standard maintenance terms but your property has shared building systems
• Generic outgoings provisions don't account for unmetered services or unequal common area benefits
• Standard "restore to original condition" clauses don't reflect your property's actual age and existing wear
• Template alteration provisions don't address heritage restrictions, structural constraints, or shared infrastructure
• You're having recurring disputes about whether lease clauses actually apply given your property's specifics
• You're using an old lease without considering how property condition and characteristics have changed

When disputes arise about maintenance responsibilities, cost allocations, alteration permissions, or make-good obligations, they almost always trace back to lease terms that don't account for property characteristics. Getting lease provisions tailored to your property's reality from the start prevents these frustrating and costly situations.

Ready to protect your property investment with a well-drafted lease? Let's discuss your specific leasing situation and ensure your lease provides the protections you need.

Professional Lease Drafting for NSW Landlords

I work with commercial and retail property landlords to draft leases with terms tailored to their property's specific characteristics. Having handled lease disputes throughout my practice, I understand how critical it is for lease provisions to account for property realities - shared systems, aging equipment, unmetered services, structural constraints, existing condition - rather than applying generic template terms that don't fit.

Whether you're leasing premises for the first time or you've identified that your current lease terms don't properly account for your property's characteristics, let's work through your specific situation. I offer fixed-fee lease drafting so you can ensure your lease provisions match your property's operational realities without uncertainty about legal costs.

Contact LexAlia Property & Commercial Law to discuss your commercial or retail lease needs. Together, we'll ensure your lease terms actually fit how your property functions rather than applying standard clauses that don't account for your premises' specific characteristics.