A Cautionary Tale: Don’t Assume Your Business Use is Approved

A Cautionary Tale: Don’t Assume Your Business Use is Approved

Imagine signing a lease for the perfect space—only to discover, two days into trading, that your business doesn’t have the required approval to operate. That’s exactly what happened to one tenant, who then faced compliance action and a development application costs upwards of $15,000!

Here’s the lesson: just because a lease says you’re allowed to run a certain business doesn’t mean that use is lawful under local planning laws.

Most commercial leases specify a “permitted use” (e.g. “gym” or “pharmacy”), but that’s simply an agreement between landlord and tenant—it does not mean your use is lawful under state or territory planning regulations. In fact, many leases place the obligation to obtain development approvals squarely on the tenant.

What should you do before signing a lease?

Before signing a lease, you should:

• Review the local planning controls (such as the Crown Lease or the relevant Local Environmental Plan (LEP) in NSW);
• Search for any existing development approvals on the site; and
• Engage a leasing solicitor who understands both planning law and commercial leasing.

The bottom line? Don’t assume that just because a business has previously operated in the premises, you’re automatically in the clear. Always do your due diligence—and one that’s entirely avoidable with the right advice upfront.