Agreements for Lease in NSW

The document that binds a landlord and a tenant to a lease that cannot be signed yet, because the premises are not finished, an approval is outstanding, the plan is not registered or the last tenant has not left.

The lease settled now and annexed in agreed form
Conditions, works, sunset dates and rent commencement dealt with up front
Retail and commercial, acting for the landlord or the tenant

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Agreements for Lease

What an Agreement for Lease Is

An agreement for lease is a binding contract to grant and take a lease at a future date. It is not the lease itself, and it does not give the tenant possession.

It does 2 things. It locks in the deal, so neither side can walk away or reprice while the premises are being made ready. And it sets out exactly what has to happen before the lease can start, who is responsible for each of those things, and what happens if they do not happen on time.

The lease is normally settled at the same time and annexed to the agreement in its agreed form. That is the part people underestimate. Once the lease is annexed, the terms are fixed, and the only thing left is for the conditions to be met and the document to be signed. An agreement for lease that does not annex the lease leaves the whole negotiation still to be had, at a point where one side has usually lost the ability to walk away.

This page is general information about NSW law, not advice on your transaction.

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When One Is Used

When You Need an Agreement for Lease

The common thread is a gap between the day the deal is agreed and the day the lease can sensibly start. An agreement for lease is what holds the deal together across that gap.

The premises are not built

A warehouse, shop or office still under construction. The tenant commits now and takes the lease when the building is finished and ready to hand over.

Works or fit-out are outstanding

The landlord has base building or make-good works to finish, or the tenant needs its fit-out done before it can trade. The agreement says which works belong to whom and what standard they have to meet.

An approval is still pending

A development consent, a change of use, a building certificate or a licence the tenant needs to operate. The lease is made conditional on the approval coming through.

The plan is not registered

A new strata or community scheme, or a subdivision. There is no lot to lease against until the plan registers, so the lease has to wait.

The current tenant is still there

The outgoing tenant is holding over, or in a make-good dispute. The incoming tenant locks in its position now rather than losing the site.

The landlord is not the owner yet

The landlord is buying the property, or taking a head lease, and cannot grant a lease until it settles. The agreement is made conditional on the landlord acquiring its interest.

The Substance

What the Agreement Has to Settle

Most agreements for lease that go wrong go wrong on 1 of these 6 points. They are worth getting right at the drafting stage, not at the point where the building is late.

The conditions

What has to happen before the lease starts, who is responsible for making each of those things happen, who carries the cost, and what each party can do if a condition is never satisfied. A condition with no owner and no deadline is not a condition, it is a hope.

The works

Which works are the landlord’s and which are the tenant’s, to what specification, and who certifies that they are finished. Practical completion needs a definition the parties can apply, and a process for dealing with defects that does not hold up the lease commencing.

The dates

A target date for completion and a long-stop or sunset date after which either party can walk away. The point that gets missed is whether an extension of time moves only the completion date or the sunset date as well. That single distinction decides who is still bound when a project runs late.

Rent and incentives

When rent starts running, and whether it runs from practical completion, from handover or from the day the tenant opens for trade. Rent-free periods, fit-out contributions and abatements should be documented here, including whether they are repayable if the tenant defaults or leaves early.

The lease itself

Annexed in its agreed form. If it is not, the parties are agreeing to agree, and the lease terms are still live at a point where the tenant has usually spent money and lost its alternatives.

Security and access

When the bank guarantee, bond or personal guarantee is given, and when the tenant can get onto the site to start its fit-out. Early access needs its own terms covering insurance, risk, and whether rent or outgoings run during that period.

The Legal Position in NSW

An agreement for lease is not a lesser document than a lease. It carries its own consequences from the day it is signed.

It creates an interest in land: a binding agreement for lease gives the tenant an equitable interest in the property, which can be protected by lodging a caveat. That matters if the landlord sells the property or grants a mortgage before the lease is signed, and it is the main reason a tenant should not treat the agreement as a formality.

It is not registered: an agreement for lease is not a registrable dealing at NSW Land Registry Services. The lease is what gets registered later, and only where the term including options runs beyond 3 years. Until then the caveat is the tenant’s protection.

It has to be in writing: an agreement affecting an interest in land must be in writing and signed to be enforceable. A signed heads of agreement, an offer letter or an email chain may or may not clear that bar, and whether it does is usually argued after the relationship has already broken down.

Duty: lease duty in NSW was abolished for instruments dated on or after 1 January 2008, so an ordinary agreement for lease attracts no duty. That changes where something other than rent moves: a premium or lump sum paid for the grant, non-monetary consideration, or an option to purchase built into the deal. Those are worth checking before signing, not after.

Retail Shops

If the Premises Are a Retail Shop

The Retail Leases Act 1994 (NSW) adds a layer that catches people out on agreements for lease more often than on ordinary leases, because the timing works differently from how it reads.

The disclosure statement runs off the earliest event: the landlord must give the tenant a disclosure statement at least 7 days before the lease is entered into. A lease is treated as entered into at the earliest of it being signed by both parties, the tenant going into possession, or the tenant first paying rent. On an agreement for lease the tenant often goes in early to fit out, which can start that clock long before anyone signs the lease. The practical course is to give the disclosure statement at least 7 days before the agreement for lease is signed.

What happens if it is wrong: where the disclosure statement is not given, is incomplete, or contains information that is materially false or misleading, the tenant may be able to terminate within 6 months of entering into the lease and claim compensation. On a deal where the landlord has built to suit, that is a significant exposure sitting on a piece of paperwork.

Registration: a retail shop lease with a term over 3 years including options must be registered, and it is the landlord who has to lodge it. A long fit-out or construction period at the front of a deal pushes the end date out and can take a lease over that line when nobody expected it to.

One to watch: a bill before the NSW Parliament would allow legally represented parties to shorten or waive the 7 day disclosure period. As at September 2026 it has not passed, so the 7 days still applies and cannot be contracted out of.

Working With Us

How We Handle an Agreement for Lease

We draft the agreement and the lease together: the 2 documents have to line up. A commencement date in the lease that does not match the trigger in the agreement, or a rent review clause that assumes a commencement date that never happens, is the sort of thing that surfaces 2 years later at the first review.

We start from the commercial position, not the precedent: what the works are, who is doing them, when they are meant to finish, and what each side needs to be able to do if they do not. Those answers drive the drafting.

We tell you where the risk sits: particularly around the sunset date, extensions of time and early access, so the decision about how much risk to accept is yours to make with the position in front of you.

Fees: drafting an agreement for lease starts at $1,600 plus GST where we are also preparing the lease annexed to it, which is charged separately at our usual lease fee. Where the agreement is heavily conditional, with staged works, a fit-out schedule or rent abatement tied to completion, we give you a quote before we start. Reviewing an agreement the other side has drafted is quoted separately.

See the full fee list

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Common Questions

What is the difference between an agreement for lease and a lease?

A lease grants the tenant the right to occupy the premises now. An agreement for lease is a binding promise to grant and take that lease at a future date, once agreed conditions are met. The tenant has no right to possession under an agreement for lease unless the agreement gives early access for fit-out on its own terms.

Is an agreement for lease legally binding?

Yes. Provided it is in writing, signed, and its essential terms are certain, an agreement for lease binds both parties and is enforceable, including by an order compelling the other side to enter into the lease. It is not a preliminary or non-binding document, and it should not be signed on the basis that the real negotiation comes later.

Can I lodge a caveat to protect an agreement for lease?

A binding agreement for lease gives the tenant an equitable interest in the land, which is a caveatable interest. Whether lodging a caveat is the right step depends on the deal, and many agreements for lease deal with it expressly, either permitting a caveat or requiring the tenant not to lodge one. A caveat lodged without a caveatable interest exposes the person lodging it to a compensation claim, so it is worth getting advice before lodging.

What happens if the premises are not ready by the sunset date?

That depends entirely on what the agreement says. A well drafted sunset clause gives one or both parties the right to terminate after a stated date, sets out what happens to money already paid, and makes clear whether delays caused by the tenant, or by events outside either party’s control, extend that date. Where the agreement extends the completion date for delays but leaves the sunset date fixed, the landlord can end up bound to a project it can no longer deliver on time, and the tenant can walk.

Do I pay rent during the fit-out period?

Usually not, but it is a matter for negotiation and it needs to be stated. Rent commonly starts at practical completion, at handover, or at the point the tenant opens for trade, and a fit-out period is often rent-free. The agreement should also say whether outgoings, insurance and utilities run during fit-out, because those are frequently treated differently from rent.

Does the Retail Leases Act apply to an agreement for lease?

Where the premises are a retail shop, the Act’s protections attach to the leasing transaction, and the disclosure timing works off the earliest of the lease being signed, the tenant taking possession, or rent first being paid. Because a tenant often takes possession early to fit out under an agreement for lease, the safe course is to give the disclosure statement at least 7 days before the agreement for lease is signed rather than waiting for the lease.

Is an agreement for lease the same as a heads of agreement?

No. A heads of agreement is usually intended to record the commercial terms without binding the parties, and it often says so. An agreement for lease is intended to bind. The difficulty is that a heads of agreement that is detailed, signed and acted on can end up being held to be binding anyway, which is why it is worth being deliberate about which document you are signing.

What does an agreement for lease cost?

Drafting an agreement for lease starts at $1,600 plus GST where we are also preparing the lease annexed to it, with the lease charged separately at our usual lease fee. Heavily conditional agreements, staged works and fit-out schedules are quoted before we start, and reviewing an agreement drafted by the other side is quoted separately. Our full fee list is on the pricing page.

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Agreements for Lease, Drafted to Hold Up

We act for landlords and tenants on retail and commercial agreements for lease across NSW, with the lease drafted alongside it so the 2 documents work together.

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