Commercial Property Repairs: Landlord vs Tenant Responsibilities

Few things disrupt a business faster than a premises problem.

A leaking roof can shut down a retail shop. A broken roller door can create a security risk. A failed air-conditioning unit can make a hospitality venue unusable in summer. And then the big question hits: who’s actually responsible for fixing it?

In Australia, commercial property repairs are usually governed by the lease. But “the lease” isn’t always as clear as you’d hope - especially when the issue sits in a grey zone between routine maintenance, urgent repairs, building compliance, or damage caused by a tenant’s use.

This guide walks you through how commercial property repairs typically work for small business landlords and tenants, what to check in your lease, and how to handle repairs in a way that protects your cash flow and reduces legal risk.

What Counts As “Commercial Property Repairs” (And Why The Label Matters)

“Commercial property repairs” is a broad term. In practice, most lease disputes happen because the parties are talking about different categories of work - and those categories can have different legal outcomes.

Repairs vs Maintenance (Not Always The Same Thing)

Many commercial leases separate:

• Repairs: fixing something that is broken, damaged, or not functioning as intended (e.g. replacing a broken hot water system).
• Maintenance: ongoing upkeep to prevent deterioration (e.g. servicing air-conditioning, cleaning gutters, pest control).

A lease might make the tenant responsible for “maintenance” but the landlord responsible for “repairs” - or vice versa - so it’s important to avoid assuming the words mean the same thing.

Capital Works vs Repairs

Some works feel like “repairs” but are actually significant replacements or upgrades, such as:

• replacing the entire roof rather than patching a leak
• re-wiring electrical systems to meet updated safety standards
• major plumbing replacement due to age and corrosion

Depending on the lease wording (and sometimes the type of premises and applicable state/territory rules), these works may be treated differently to routine repairs and maintenance. In many leases, larger “upgrade” style works are kept as a landlord responsibility - but it’s not automatic, so it’s worth checking whether the lease uses terms like “capital works”, “replacement”, “renewal” or “refurbishment”, and whether those are carved out of the tenant’s obligations.

Make-Good Works (End Of Lease Repairs)

Another common category is end-of-lease “make good”. This is where the tenant must return the premises to an agreed condition (often including repairing damage and removing fit-out).

Make-good obligations can be a major cost at the end of a lease, so it’s worth checking how repairs are treated during the term versus at the end.

Who Pays For Commercial Property Repairs: Landlord Or Tenant?

There isn’t one universal rule across Australia for who pays for commercial property repairs. The answer usually depends on:

• what the lease says
• whether the premises is covered by retail leasing legislation in your state/territory (for example, a shop in a shopping centre may have extra protections)
• what caused the problem (fair wear and tear vs tenant damage)
• whether the repair relates to structure, services, compliance, or tenant fit-out

As a starting point, most leases split responsibility along fairly predictable lines - but the wording is everything.

Common Landlord Responsibilities

Commercial leases often make the landlord responsible for the “base building” and structural items. This can include:

• structural repairs (foundations, structural walls, roof structure)
• external walls and common areas (especially in multi-tenant buildings)
• major building services provided to the premises (depending on lease wording)
• building compliance items that relate to the base building or shared areas (where allocated to the landlord under the lease and/or relevant state/territory requirements)

Landlords also commonly handle building insurance. If you’re not sure where the line sits, it helps to understand building insurance responsibilities first, because insurance sometimes drives how repairs are funded and managed.

Common Tenant Responsibilities

Tenants are often responsible for day-to-day upkeep and issues arising from their use of the premises, such as:

• keeping the premises clean and in good order
• repairs required because the tenant (or their staff/customers/contractors) damaged the premises
• maintenance and servicing of equipment the tenant uses or controls (especially if installed by the tenant)
• maintenance of internal fixtures and fittings

It’s also common for tenants to be responsible for “plate glass” and consumables (like light globes), but again, you should confirm your lease wording.

Areas That Commonly Cause Disputes

The most common “grey zones” we see with commercial property repairs include:

• Air-conditioning and ventilation: Is it part of base building services, or tenant-controlled plant?
• Plumbing blockages: Is it due to tenant use (e.g. grease/foreign objects), or aging pipes?
• Electrical faults: Is it a landlord wiring issue, or tenant equipment overload?
• Water ingress: Is it roof/external structure, or a tenant’s own plumbing/fit-out issue?

If you’re entering a lease (or already in one) and want clarity before issues arise, a Commercial Lease Review can help identify repair and maintenance risks early - when they’re usually cheaper to manage.

How To Handle Commercial Property Repairs In Practice (Without Letting It Spiral)

Even when a lease is clear, repairs can become messy if the parties don’t follow a workable process. If you want to protect your business relationship (and avoid unnecessary downtime), it helps to treat repairs like an operational workflow.

Step 1: Check The Lease First (Then Confirm In Writing)

Before anyone arranges contractors or refuses responsibility, check:

• the repair and maintenance clauses
• any “yield up” or make-good clauses
• outgoings clauses (some repairs are handled via outgoings in certain lease structures)
• any requirements to use landlord-approved contractors
• notice requirements (how and when you must notify the other party)

Then, confirm the issue in writing. A short email with photos and a clear description of the fault can prevent later disputes about timing, severity, and whether notice was given properly.

Step 2: Treat Urgent Repairs Differently To Non-Urgent Repairs

Some leases define “urgent” repairs and allow faster action. Even where the lease doesn’t use that term, you should still triage issues based on risk:

• Safety issues: exposed wiring, structural hazards, flooding
• Security issues: broken locks/doors/shutters
• Business interruption issues: loss of essential services (power, water, HVAC for temperature-dependent operations)

For urgent issues, delays can create bigger losses and increase the chance of disputes about negligence or mitigation (whether someone took reasonable steps to reduce loss).

Step 3: Get Quotes And Document Scope

Disputes often arise because the parties disagree about what the repair requires. Practical steps that reduce this risk:

• get at least one written quote with a clear scope of works
• ask the contractor to identify the likely cause (wear and tear vs misuse)
• keep invoices, photos, and contractor notes

This paper trail matters if costs are later recovered, deducted, or disputed.

Step 4: Consider Rent Relief If The Premises Can’t Be Used

If repairs make the premises unusable (or partially unusable), tenants often ask for rent reduction, rent suspension, or some other adjustment. Whether you’re entitled to this depends on:

• the lease wording (abatement clauses are common)
• whether the issue is insured damage
• whether the tenant contributed to the damage
• retail lease legislation (if applicable)

If the parties are open to a commercial solution, a rent abatement agreement can document a temporary rent arrangement clearly, without accidentally varying the lease in an unintended way.

What Your Lease Should Say About Commercial Property Repairs (So There Are Fewer Surprises)

If you’re negotiating a new lease (or renewing an existing one), this is your opportunity to make commercial property repairs predictable. For small businesses, predictability is often more valuable than “winning” a clause on paper.

Repairs And Maintenance Clause (The Core Clause)

Look for (or negotiate) clarity on:

• what “repairs” includes
• what “maintenance” includes
• whether the tenant must return items in working order, even if they’re old
• whether the tenant must replace (not just repair) certain items when they fail
• whether fair wear and tear is excluded from tenant repair obligations

If you see phrases like “keep in good and substantial repair” or “at the tenant’s cost”, treat them as red flags to review carefully - they can be broader than many tenants expect.

Condition Reports And Entry Condition Documentation

A condition report (with photos) at the start of the lease can be one of the most practical ways to reduce disputes later.

Without it, arguments about whether something was already faulty can become a “he said, she said” situation - which is expensive to resolve.

Fit-Out, Fixtures, And Services

Many repair disputes come down to whether something is part of the landlord’s premises or the tenant’s fit-out. Your lease should ideally deal with:

• who owns the tenant’s fit-out during the lease
• who maintains items installed by the tenant (like exhaust systems or internal plumbing)
• whether landlord consent is required for replacement/repair works
• what happens to tenant-installed items at the end of the lease

Insurance, Damage And Reinstatement

Your lease should align with the insurance position, including:

• what events are “insured damage”
• what the landlord must do after an insured event
• whether rent is suspended while repairs are carried out
• what happens if reinstatement is not practical

This is also where the commercial reality matters: if you can’t trade, you need a plan for how your lease responds - not just a vague promise that “the landlord will repair”.

What If Repairs Become A Dispute (Or A Reason To End The Lease)?

Sometimes, despite best efforts, commercial property repairs turn into a dispute. This usually happens because:

• the cost is significant
• the cause is unclear
• the repair impacts trade (downtime)
• one party believes the other is in breach of the lease

Start With The Notice And Remedy Process

Many leases require formal notice before you can claim breach or take further steps. If you skip the process, you risk weakening your position later.

In practical terms, a solid notice will usually:

• identify the clause relied on
• describe the issue and evidence
• request action within a reasonable timeframe
• reserve the sender’s rights (for example, to recover costs or pursue other remedies)

Because notice requirements can be strict, it’s worth getting advice before escalating - especially if the relationship is deteriorating.

If You’re Thinking About Ending The Lease

Tenants sometimes ask whether unresolved repairs let them “walk away”. Landlords may ask whether they can terminate if a tenant refuses to repair.

Ending a commercial lease can be high-risk if not done properly. In many cases you’ll need to follow specific steps, and the wrong move can create liability for losses, wrongful termination claims, or disputes over security deposits and make-good.

If termination is on the table, it’s a good idea to understand the risks around breaking a commercial lease agreement before you take action.

Where the relationship is beyond repair but both sides want a clean exit, structured documentation (and clear handover obligations) can help. In more complex situations, lease termination advice can help you avoid missteps during the process.

When The Tenant Is Leaving But Repairs Are Still Outstanding

Another common scenario is a tenant assignment or sale of business where repairs become a sticking point.

If a tenant is transferring their lease to a new operator, it’s worth checking how repair obligations are handled on exit, and who is responsible for rectifying existing issues. Where a lease transfer is permitted, a deed of assignment of lease often becomes the key document that clarifies who takes on what obligations going forward.

Key Takeaways

• Commercial property repairs in Australia are usually determined by the lease - so the wording (repairs vs maintenance vs significant replacement/upgrade works) really matters.
• Landlords often handle structural/base building issues, while tenants often handle day-to-day upkeep and damage caused by their use, but there are many grey areas (especially with services like air-conditioning and plumbing) and outcomes can vary depending on the lease and, in some cases, state/territory retail leasing rules.
• A practical repairs process helps prevent disputes: check the lease, notify in writing, document the cause, get clear quotes, and keep records.
• If repairs affect the tenant’s ability to trade, consider whether rent relief is available and document any temporary arrangement carefully.
• Most repair disputes escalate because notice requirements weren’t followed or expectations weren’t documented early - getting advice before escalating can protect your position.
• If repairs become serious enough to trigger a lease exit, take care: ending a commercial lease incorrectly can create significant legal and financial risk.

If you’d like help reviewing your lease repair obligations or documenting a repair-related agreement, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.