The key financial obligation of the tenant under a lease is the obligation to pay rent. A tenant will generally contribute towards the landlord’s costs of owning and managing the premises (including the building the premises are located in). These costs are commonly known as outgoings.

Other financial contributions that may be made by a tenant are for:

• services to the premises;

• cleaning the premises;

• afterhours air-conditioning;

• interest; and

• possibly also a contribution towards the landlord’s legal fees for the preparation and negotiation of the lease.

This section discusses the different ways outgoings can be charged to a tenant (if at all), what costs commonly form part of the outgoings and the different ways a tenant can be required to pay the outgoings, as well as providing practical tips in relation to the other charges payable by a tenant under a lease. See Financial obligations.

A lease will specify what the tenant must use the premises for.

It can be helpful to discuss a tenant’s business with them to determine the full nature and extent of the tenant’s business and the manner in which they propose to use the premises, especially if the lease is not a commercial office lease. See Use of premises for the permitted use.

A lease will generally place an obligation on a tenant to keep the premises in good repair.

This obligation can be a heavy one, especially if the premises are not in good repair at the commencement date of the lease. This section considers the appropriate physical due diligence to carry out before entering into the lease, the common extent of the tenant’s obligations under the clause and what to do if the tenant has occupied the premises prior to the commencement date of the lease under consideration. See To keep the premises in good repair.

A lease will generally require a tenant to comply with the law, including any regulations, by-laws and orders of any authorities. It has become common to include a requirement to comply with Standards Australia.

Typically, a landlord is entitled to make rules in relation to the building or estate that the premises being leased forms part of. A breach of the rules generally has the same consequences as a breach of the lease. See To comply with the law and the rules.

A lease will require a tenant to notify the landlord of damage to the premises, the building and the services.

Leases may also contain clauses that provide that a tenant must notify the landlord of any damage or breach of lease by the landlord and if the tenant does not do so, the landlord will not be liable for either the breach of lease or any damage flowing from that breach. See Requirement to notify landlord of damage/landlord’s breach of lease.

A lease commonly requires a tenant to obtain the landlord's consent in two instances:

• when dealing with the lease, for example a request to assign the lease, grant a sublease, grant a licence or otherwise let a third party occupy or share possession of the premises or a share transfer in which the control of the tenant company changes (see Overview); and

• before making alterations to the premises.

See To obtain landlord’s consent.

A landlord will commonly require a tenant to take out several forms of insurance. This section examines the different types of insurance that are commonly required and how to avoid a tenant accepting an obligation that it cannot comply with. See Insurance.

A tenant is required to return the premises to the landlord at the end of the lease in a condition consistent with the tenant having performed its obligations under the lease. This obligation arises as a result of the nature of the lease as a contract between two parties.

A tenant is usually required to carry out some form of “make good” in relation to the premises at the end of the lease. “Make good” is commonly thought of as being the tenant’s obligation to remove fixtures and fittings from the premises before it vacates them and to make good any damage caused by that removal. See Tenant’s obligations at the end of the lease – non-retail premises.

This guidance note relates to the special issues arising in regard to the make good obligations for industrial and retail premises. See Tenant’s obligations at the end of the lease – special issues regarding industrial and retail premises.

A landlord commonly requires a tenant to provide security to the landlord to be held by the landlord in case the tenant breaches the lease. The amount and nature of the security required by the landlord will depend upon the conditions in the market and the perceived risk of the tenant. See To provide security for the performance of the tenant’s covenants.