Commercial Property Lease Disputes: A Guide for Queensland Landlords and Tenants

By Nanae Yoshiwara, Senior Associate | Litigation & Dispute Resolution

Commercial leases are crucial agreements that underpin the business relationship between landlords and tenants. When properly drafted, they create a stable foundation for both parties, ensuring smooth business operations. However, disputes can arise when terms are unclear or incomplete, which can be costly and time-consuming to resolve.

This guide explores key components of a well-drafted commercial lease, common dispute triggers, and legal options for landlords and tenants in Queensland.

What Makes a Commercial Lease Legally Binding in Queensland?

For a commercial lease to be legally binding, it must contain certain essential elements. Under Queensland law, the following are the absolute minimum requirements:

• Identification of the parties (landlord and tenant).
• Description of the premises (address and size of the leased space).
• Term of the lease (start and end dates).
• Rent and payment terms.

What Should Be Included to Avoid Disputes?

While these elements ensure that the lease is valid, more comprehensive terms should be included to minimise the risk of disputes. These terms should address:

• Repairs and maintenance responsibilities (clearly allocating duties between landlord and tenant).
• Rent review mechanisms (how and when rent can be increased).
• Use of common areas (parking, storage, etc.).
• Termination provisions (including grounds for breach and procedures for ending the lease early).

Having a lease that is both legally binding and well-structured helps both parties avoid costly disputes and ensures smooth operations throughout the lease term.

What are the Risks of DIY (Do-It-Yourself) Leases?

In many cases, parties may rely on DIY lease templates found online. While these templates can cover the essential terms, they often lack the detail necessary to prevent or resolve disputes. For example:

• Use of common areas definition: Disputes may arise over the use of shared spaces if the lease does not clearly define how these areas can be used.
• Ambiguities in maintenance obligations: Without clear language on who is responsible for repairs, parties may disagree on who should bear the costs.
• Lack of a well-defined termination clause: This leads to confusion when either party wishes to end the lease early, resulting in costly legal action.

Even though a DIY lease may technically bind the parties, its inadequacies often make it more difficult to resolve conflicts. Under the legal principle of contra proferentem, any ambiguity in the lease will generally be interpreted against the party who drafted the contract or the party seeking to rely on the ambiguous provision.

This highlights the importance of having clear and precise language in all lease provisions, especially in key areas like termination.

How Can a Landlord Terminate a Commercial Lease?

In cases where a commercial lease does not specify how to terminate the agreement, landlords have a few options under Queensland law:

• Termination by agreement: Landlords and tenants can mutually agree to terminate the lease early. This agreement should be formalised in a deed of surrender and release.
• Termination for breach: If a tenant has breached the lease (e.g., failure to pay rent or improper use of the premises), the landlord can issue a Notice to Remedy Breach of Covenant under the Property Law Act 2023 (Qld). The new Act consolidates and updates the previous regime under the 1974 Act. The landlord must give a written notice specifying the breach, allowing the tenant a reasonable period (at least 14 days for non-payment of rent) to remedy. If the tenant fails to comply, the landlord may exercise the right of re-entry or forfeiture as provided in the 2023 Act.

For termination to be valid, the breach must typically involve a significant or essential term of the lease, meaning one that goes to the core of the agreement. Examples include failure to pay rent, violating use clauses (e.g., unauthorised use of the premises), or failure to maintain insurance. Minor or trivial breaches, especially those that do not affect the landlord’s ability to use the property, are generally not sufficient to justify termination.

Tenants also retain statutory rights to apply to the Court for relief against forfeiture under the new Act, meaning termination is not always final if the breach can be remedied and compensation paid.

How Can Tenants Avoid Disputes and Legal Costs?

Tenants can take proactive steps to avoid disputes and potential termination:

• Carefully review the lease before signing: Ensure that all critical aspects of your business operations, such as parking, use of common areas, and maintenance responsibilities, are clearly addressed.
• Open communication with the landlord: If issues arise, discussing them early can often prevent the situation from escalating.
• Respond promptly to breach notices: If you receive a Notice to Remedy Breach, seek legal advice immediately and take action to remedy the issue. Failure to do so can lead to the landlord terminating the lease, resulting in significant disruption and costs.

If a tenant believes they are being unfairly targeted with a breach notice, they should seek legal advice to ensure the landlord is acting within the lease and the law. Argon Law can assist tenants in defending against unreasonable termination actions and in resolving disputes before they escalate.

Frequently Asked Questions on Commercial Lease Disputes in Queensland

Q. What happens if a lease lacks clear termination clauses?

A. Without clear terms, disputes over early termination can lead to costly legal battles. Courts may interpret vague clauses against the drafter under contra proferentem.

Q. Can a landlord terminate a lease for minor breaches?

A. No. Only significant breaches (e.g., non-payment of rent or unauthorised use) justify termination under Queensland law. Minor breaches may allow a damages claim but will not usually justify forfeiture.

Q. How can tenants avoid lease disputes?

A. Review the lease carefully, communicate with the landlord, and respond promptly to breach notices with legal guidance.

Q. Why should I hire a lawyer for a commercial lease?

A. A lawyer ensures your lease is clear, compliant, and tailored to your needs, reducing the risk of disputes and costly litigation. They can also advise on compliance with the Property Law Act 2023 (Qld), the Retail Shop Leases Act 1994 (Qld), and recent disclosure and safety requirements.

How Can Argon Law Help with Commercial Lease Disputes?

Argon Law’s experienced team can assist landlords and tenants in Queensland with:
• Drafting and reviewing leases for clarity and compliance.
• Responding to or issuing breach notices.
• Negotiating lease terminations or settlements.
• Resolving disputes efficiently to protect your business.

At Argon Law, our team is regularly engaged in navigating commercial leases in Queensland and are ready to help you with any disputes that arise. Whether you are a landlord seeking to enforce a lease or a tenant facing an unfair breach notice, our tailored solutions protect your interests.

Contact us today to find out how we can help you resolve your commercial lease dispute and ensure a positive outcome for your business.