No Commercial Lease Agreement: What Are My Rights?

Leasing a shop, office or warehouse without a signed commercial lease is more common than you might think. Maybe you moved in under a verbal agreement, the previous lease expired and you “kept paying rent”, or the landlord wanted you trading quickly and promised to “sort the paperwork later”.

If you’re operating without a formal lease, you still have rights in Australia - and so does your landlord. The key is understanding what governs your arrangement, where the risks sit, and the practical steps you can take now to protect your business.

In this guide, we’ll break down what “no lease” really means, how notice and eviction work, and the documents that can give you certainty moving forward.

What Does “No Commercial Lease Agreement” Actually Mean?

“No lease” usually describes one of these situations:

• Verbal agreement only - you agreed key terms (rent, premises, start date) in conversation but never signed a lease.
• Expired lease (holding over) - your written lease ended but you stayed in the premises and kept paying rent with the landlord’s consent.
• Month‑to‑month arrangement - the landlord invoices monthly and you pay, but there’s no end date or formal terms in writing.
• Heads of agreement only - you signed a brief “offer to lease” or term sheet, but not the full lease.
• Licence, not a lease - you occupy a space on a shared or flexible basis where the document calls it a “licence”.

Each scenario carries different legal consequences. Even without a signed lease, you’re not in a legal vacuum - rent you’ve paid, communications between you and the landlord, and conduct over time can create rights and obligations.

Do You Still Have Rights Without A Written Lease?

Yes. In Australia, a tenancy can exist without a signed lease. Your rights will come from a mix of:

• What you and the landlord agreed - verbally or in emails (rent, area, permitted use, start date, incentives, etc.).
• Conduct - for example, paying and accepting rent, handing over keys, or allowing possession.
• Applicable laws - retail leasing legislation, property law, and general contract law imply certain terms and protections.

If you’re in a shopping centre or you sell goods or services to the public, your premises may be a “retail shop” under state retail lease laws. In those cases, mandatory rules can apply even if there’s no written lease (e.g. disclosure requirements, limits on certain charges, and dispute procedures).

However, there are significant gaps when everything is informal. Without a written lease, it’s harder to prove what was agreed about rent reviews, outgoings, repairs, trading hours, signage, make good, options to renew, and early termination. That uncertainty is risky for both parties and can lead to disputes.

Common Scenarios And How To Respond

1) Holding Over After Lease Expiry

Most written leases say that if you stay after expiry with the landlord’s consent, you “hold over” as a monthly tenancy on the same terms, except the end date. If your old lease had clear rules (e.g. outgoings, use, insurances), many of those may still apply.

Action: Ask the landlord to confirm in writing that you’re continuing on the same terms and whether a new lease will be issued. Consider negotiating fresh terms now rather than waiting - you have leverage while you’re a paying, established tenant.

2) Month-To-Month Occupancy, No Prior Lease

If there’s never been a formal lease, your arrangement is often treated as a periodic tenancy. The law generally allows either party to end it with reasonable notice (often a full rental period - see the “Can the landlord evict me?” section below). You’ll still owe rent, and you’re expected to use the premises reasonably and not cause damage.

Action: Clarify the basics in writing - rent, outgoings, access, permitted use, and notice periods. Then consider moving to a proper Commercial Tenancy Agreement for certainty.

3) Verbal Agreements Or Email Chains

Verbal or email agreements can be enforceable, but they are harder to evidence. If a dispute arises about what was agreed, it often becomes your word against the landlord’s, and the court will look at conduct (like rent payments) to fill the gaps.

Action: Pull together all evidence (messages, invoices, bank statements) and create a short summary of the agreed terms to send for the landlord’s written confirmation. This can prevent misunderstandings later.

4) Licence Vs Lease

A licence typically gives you a right to use space without exclusive possession (for example, a chair in a salon or a desk in a coworking hub). A lease usually grants exclusive possession of defined premises. Calling an arrangement a “licence” doesn’t automatically make it one - substance matters.

Action: If you’re in a shared or flexible space, a well-drafted Property Licence Agreement can be a practical solution when a full lease isn’t appropriate.

5) Taking Over From Another Tenant Without Paperwork

If you “took over” from a previous tenant but didn’t sign a transfer, you may be exposed. Typically, you need a formal deed of assignment with landlord consent. Without it, you may lack rights (like options to renew), and the outgoing tenant may remain liable for your defaults.

Action: Ask the landlord to regularise the arrangement. If you want to remain long-term, put a proper lease or a documented assignment in place to lock in your rights.

Key Risks Of Occupying Without A Lease

Before you keep trading on a handshake, consider the business risks:

• Short notice to leave - a periodic tenancy can usually be ended on relatively short notice, which can disrupt your operations overnight.
• Unexpected costs - outgoings, repairs, make good, and rent increases can be contested or imposed without clear caps or processes.
• No option to renew - you may have no right to extend your stay, even if you’ve built goodwill at that location.
• Disputes are harder (and costlier) - without clear written terms, disputes chew time and money and distract from running your business.
• Fit-out and signage uncertainty - approvals, ownership of fit-out, and end-of-term obligations can be unclear.

We’ve written in more detail about these issues in our guide on no lease agreement risks.

Can The Landlord Evict Me Without Notice?

In most “no lease” situations, your arrangement is treated as a periodic tenancy (often monthly) unless the parties agreed otherwise. For a monthly tenancy, the common rule is that either party can end it by giving at least one clear rental period’s notice. Some states have specific rules for retail shops or processes for ending tenancies in certain circumstances.

In New South Wales, for example, landlords generally must give proper notice and follow the right process before requiring you to vacate. Our guide to lease termination notices in NSW explains how effective notice works in practice.

Broadly across Australia, if you’re on a true month-to-month basis, you should expect notice of at least a full rental period (e.g. one month) unless there’s a serious breach. For a deeper look at typical timeframes and what “reasonable” notice can mean, see our overview of month-to-month notice requirements.

Tip: If you receive a notice to vacate, act quickly. Check if the premises are a “retail shop” (extra protections may apply), review your evidence of agreed terms, and seek legal advice before responding. A calm, prompt reply often opens the door to negotiation.

Paying Rent, Increases And Outgoings

Even without a signed lease, rent is still payable. The key questions are “how is rent reviewed?” and “what outgoings are you expected to pay?” Without documented terms, disagreements can arise quickly.

• Rent increases - Was a method agreed (CPI, fixed %, market review)? If not, sudden increases can be challenged as unreasonable in some contexts. In NSW, we’ve unpacked common rules around commercial rent increases, which can help you frame negotiations.
• Outgoings - Clarify which costs you pay (rates, utilities, strata, cleaning, security). Retail lease laws can limit or require disclosure for certain charges.
• Insurance - Landlords often insure the building; tenants insure their contents and public liability. If you’re unsure “who pays for what”, this explainer on who pays building insurance can help you benchmark expectations.

A short written variation or interim agreement can lock down these basics while you negotiate a full lease. Certainty here is worth a lot - it helps with cash flow planning and avoids surprises.

Repairs, Fit-Out And Make Good

Repairs and make good are common flashpoints in informal arrangements. Without a clear clause, the default position is murky: landlords generally handle structural issues, and tenants handle non-structural items they’ve damaged. But there’s plenty of grey area (air‑conditioning, plumbing, grease traps, windows, common areas).

Likewise, who owns the fit-out, and what must you remove at the end? In a written lease, “make good” terms spell this out (e.g. remove your fit-out and reinstate the premises to “base building” condition). In an informal setup, the parties often make assumptions - which can be costly later.

It’s smart to document a basic condition report with photos, and agree in writing what you can install, who pays for what, and what happens at the end of the tenancy.

Practical Steps To Protect Your Position Now

1) Gather Your Evidence

• Emails, text messages or notes of conversations setting out what was agreed.
• Rent invoices, payment receipts, and bond or security details.
• Floor plans, access dates, condition photos and any approvals you received.

Having a clear paper trail strengthens your hand in any negotiation or dispute.

2) Clarify The Basics In Writing

Send the landlord a polite summary of current terms: rent, outgoings, area, permitted use, start date, any incentives, and how either party can end the arrangement. Ask them to confirm. This alone reduces risk and misunderstandings.

3) Choose The Right Document For The Future

• Short-term or flexible occupancy? A well-structured Property Licence Agreement can offer flexibility while controlling key risks.
• Committed long-term premises? Move to a tailored Commercial Tenancy Agreement that covers rent reviews, outgoings, repairs, signage, make good, options, assignment and termination.

4) Negotiate The High-Impact Terms

Focus on the clauses that matter most to your business:

• Option to renew and how rent will be reviewed.
• Outgoings and caps where possible.
• Repair responsibilities and response times for critical services (power, air‑conditioning, lifts).
• Make good scope and fit‑out ownership.
• Early termination options (e.g. break clause or buy‑out mechanism).

A short heads of agreement can outline these terms before the full lease is drafted, helping keep both parties aligned.

5) Mind Your Guarantees And Security

Many commercial leases require a bank guarantee, bond or personal guarantee. Understand what you’re offering - guarantees are serious commitments and can have personal consequences. If you do provide one, make sure the amount and release conditions are clearly set out in the document and any side deeds.

What If You Want To Leave?

Exiting an informal arrangement is usually easier than breaking a fixed‑term lease, but you still need to follow the right process and give proper notice.

• On a month‑to‑month basis - give written notice consistent with your rental period (often one month). Return keys, pay final rent and outgoings, and agree on make good.
• If a written lease is later issued and you want out - look for any break clause or negotiate a Lease Surrender Agreement. If the landlord wants a replacement tenant, you may be able to assign the lease to a buyer of your business (with a deed of assignment and landlord consent).

We’ve set out the main options and risks in our guide to legal ways to break a lease.

When A Proper Lease Or Licence Is Worth It

Operating on a handshake can work for a while, but it’s rarely a good long‑term strategy. A properly drafted lease or licence:

• Gives you security of tenure and a clear path to renew or exit.
• Reduces disputes about rent, outgoings and repairs.
• Sets fair, predictable processes for rent reviews, assignments and make good.
• Helps you secure finance or sell your business (buyers and banks prefer documented rights).

If you’re taking over an existing site, make sure the transfer is documented correctly with the landlord through a Deed of Assignment of Lease - it’s the cleanest way to pick up rights (and limits) from the outgoing tenant.

Disputes And Notices: Keep It Calm And Documented

Whether you receive a rent increase, a notice to vacate, or a complaint about repairs, respond in writing and on time. Keep your tone professional and solution‑focused. Reference any agreed terms and attach proof of payments or prior approvals where helpful.

For NSW tenants, make sure any notice complies with the legal requirements outlined in our explainer on lease termination notices. For month‑to‑month arrangements nationwide, cross‑check the likely timeframes against the common rules set out in our notice requirements guide.

What Legal Documents Should You Put In Place?

The right document depends on how you use the premises and the level of commitment both sides want:

• Commercial Tenancy Agreement: A full lease that sets detailed rights and obligations (rent, reviews, outgoings, repairs, make good, options and assignment). Ideal for established, long‑term occupancy. Consider starting with a short form or an HOA while terms are negotiated, then progress to the full document. You can move straight to a tailored Commercial Tenancy Agreement when you’re ready.
• Property Licence Agreement: A flexible right to use defined space without exclusive possession. Useful for shared or short‑term use, pop‑ups, or where the landlord prefers licence arrangements. See our Property Licence Agreement option.
• Lease Surrender Agreement: If both parties want to end a lease early, this document records the date, make good and any payment to finalise obligations. Our team can assist with a Lease Surrender Agreement to tidy things up.
• Deed Of Assignment Of Lease: When you buy or sell a business and the lease needs to transfer, this deed (with landlord consent) moves the rights and obligations to the new tenant. Explore our Deed of Assignment of Lease service.
• Heads Of Agreement (HOA): A short, preliminary set of key terms that keeps the deal on track while the full lease is drafted. If helpful, we can review the essentials via a Lease HOA Review.

Not every business needs every document, but most will benefit from at least one of these to bring clarity and reduce risk.

Key Takeaways

• You still have rights without a signed lease - they come from what was agreed, how both parties have behaved, and relevant Australian laws (including retail leasing rules).
• The biggest risks of “no lease” are short notice to leave, surprise costs, and uncertainty about repairs, make good and renewal rights.
• If you’re on a month‑to‑month arrangement, expect that either party can usually end it with reasonable notice - understand how notice works in your state before you act.
• Lock down the basics in writing now (rent, outgoings, use, notice) and consider moving to a tailored lease or licence to protect your business.
• When exiting or transferring, use the right document (lease surrender or assignment) to avoid lingering liabilities.
• Getting legal advice early can help you negotiate fair terms, avoid disputes, and keep your operations running smoothly.

If you would like a consultation about your commercial premises when there’s no lease in place, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.