assignment of lease queensland

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Transferring a lease or licence

The transfer process for leases has been amended to introduce an exemption from needing approval for a transfer for certain leaseholders. The exemption applies from 2 December 2019.

In some cases, you may need to obtain our approval before you transfer your lease or licence, so it is important you check if you are exempt before you apply.

This guide details what you need to consider when transferring a lease or licence and how to obtain our approval for the transfer, if it’s required.

In this guide:

• Exemptions from needing our approval for a transfer
• Lease transfers for exempt leases or licence transfer
• Transferring a lease or licence when approval to transfer is required
• Information for mortgagees and receivers
• Extending a rolling term lease

Print entire guide

• Next ( https://www.qld.gov.au/environment/land/state/leases/transferring/exemptions )

The Impact of Queensland’s new Property Law Regime on Lease Assignments – Part 2 (s143)

by Elizabeth | Oct 30, 2023 | Lease Agreement , Lease Assignment , Property Law | 0 comments

Part 2: Effect of Assignment of Lease by Lessee to Assignee (Section 143)

The Property Law Bill 2023 (Qld) stands as a monumental piece of legislation set to modernise property law in Queensland. Since its introduction in the Queensland Parliament on 23 February 2023, it has been the focal point of substantial attention and anticipation. In our previous segment, we explored the alterations proposed by Section 142 of the Bill, outlining the new processes for lessors and lessees engaged in lease assignments. Now, in the second part of our series, our focus turns to Section 143 of the Bill, which delineates the practical impact of the Bill on the transfer of lease terms between lessees and assignees. 

Section 143 – A Shift in Lease Assignments

Section 143 of the Bill introduces a pivotal concept known as the ‘doctrine of privity of estate,’ a cornerstone principle governing the transfer of lease agreements. Under this doctrine, when a lease is assigned, the assignee inherits both the privileges and responsibilities originally outlined in the lease. In essence, the assignee steps into the shoes of the original lessee, embracing not only the benefits but also the obligations embedded in the lease.

Nevertheless, the Bill recognises that there are circumstances where a rigid adherence to this doctrine may not be equitable or just. To address these subtleties, the Act presents specific exceptions, allowing the assignee’s obligations and rights to diverge from the doctrine of privity of estate.

Exception 1: Personalised Lease Terms

When the original lease specifically labels a term as personal to the original lessee, the assignee is not obligated to comply with or does not gain the advantage of that term. This provision empowers lessees to negotiate lease agreements, specifying certain terms as exclusive to their unique relationship with the lessor, thus preventing their automatic transfer to future assignees.

1.     Exclusivity Clause: This clause serves as a safeguard against the lessor renting to a competing business within the same building.

2.     Right of First Refusal: This clause grants the lessee the first option to purchase the premises before it’s put on the market for sale.

3.     Specialised Usage Rights: An example of this clause is where the lessee is granted exclusive usage rights to certain common areas during the lease term (i.e. storage space, carpark, swimming pool).

While these types of provisions are undoubtedly beneficial to lessees, it’s important to recognise that lessors may not always wish to be bound by them if the lease is assigned to a new lessee. In such cases, parties involved can mutually agree that the rights granted under these clauses are personal to the original lessee, thereby maintaining flexibility and ensuring that the lease agreement aligns with the changing dynamics of the property market.

Exception 2: Express Exclusions in Lease

If the original lease explicitly excludes the application of Section 143, the assignee is not bound by the default provisions of the doctrine of privity of estate. This provides parties with the flexibility to customise their lease agreement, superseding standard provisions with specific terms.

This exception empowers parties to maintain control over the lease agreement and its terms, ensuring that it accurately reflects the evolving dynamics of their business relationship. Such autonomy benefits both lessors and lessees, allowing them to craft a lease agreement that best suits their unique needs.

Lessors can also use this exception to protect their interests by excluding or modifying certain provisions that might pose potential risks in the future. This enables them to create a lease agreement that aligns with their long-term goals and strategies while fostering a positive and mutually beneficial leasing relationship with the original lessee.

Exception 3: Agreement between Lessee and Assignee

The new Property Law Act will allow for both the lessee and assignee to jointly decide that specific term benefits will remain with the lessee. This decision must be in writing and is subject to two key preconditions:

1.     The benefit of the term accrued to the lessee prior to the assignment.

2.     The lessor provides explicit consent for the term benefit to remain with the lessee after the assignment.

This exception allows lessees the opportunity to safeguard the has negotiated an option to purchase the land, they can ensure that they can exercise this right even after assignment.

This provision in the legislation promotes flexibility and collaboration in lease assignments, allowing all parties to actively participate in shaping the lease’s future. It encourages open communication and negotiation to ensure a fair and equitable assignment. 

Section 143 of the new Property Law Act introduces a harmonious blend of legal principles and practical considerations. While the doctrine of privity of estate remains a cornerstone, the new legislation places a strong emphasis on the importance of flexibility and adaptability within lease agreements. The exceptions outlined in this legislation offer a unique opportunity for all parties involved to craft lease terms that align with their objectives, protect their interests, and promote a transparent lease assignment process.

As we await the full implementation of the new Property Law Act in Queensland, stakeholders within the property sector are encouraged to take a proactive approach in embracing these changes. A comprehensive understanding of Section 143’s provisions, their far-reaching implications, and the wealth of opportunities they offer can pave the way for well-informed decision-making. Additionally, this proactive engagement will play a pivotal role in preventing potential disputes and nurturing a lease assignment landscape that not only upholds stability but also encourages innovation.

Contact us today on (07) 3161 2847 or [email protected] for personalised guidance, tailored solutions, and expert insights that will safeguard your interests and foster a smoother transition in this evolving legal environment. Your success is our priority, and we’re ready to be your trusted partner in property law.

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Assignment of Lease

If you are selling or purchasing a business and the business is operated at a premises under a lease, the transaction would necessarily include assignment of the lease (also known as transfer of lease) from the seller (being the assignor) to the purchaser (being the assignee).

As a seller, it is important to revisit the terms of the existing lease of the premises to identify whether the lease can be assigned and the terms and conditions relating to the assignment of the lease. 

Typically, the seller is not permitted to assign the lease except with the landlord’s consent and there are requirements that must be complied with before the landlord’s consent will be granted, including but not limited to the following:

(a) specific notice requirements;

(b) credentials of the purchaser are satisfactory to the landlord;

(c) the assignor has complied with all terms in the lease and there is no breach or unremedied breach of the lease;

(d) the landlord’s reasonable costs in relation to the granting of its consent is paid. (This is usually up for negotiations between the assignor and the assignee as to who is to pay for this cost or how to share the cost;

(e) the assignor, guarantor, assignee and incoming guarantor entering into a deed of consent on terms satisfactory to the landlord;

(f) the assignee providing security reasonably required by the landlord.

Some sellers may prefer to avoid having a conversation with the landlord, especially if the relationship with the landlord is difficult. However, we do not recommend ignoring the requirements for the landlord’s consent as parting with possession of the premises upon a sale of a business without the landlord’s consent would constitute a breach of the lease, and will entitle the landlord to terminate the lease and retake possession of the premises.

If the lease is approaching expiry with few or no options or has expired, we suggest the seller finalises any renewal of lease or new lease to extend the lease term or amendment of lease to include further options, before listing the business for sale. A longer lease term is usually more attractive to buyers as it provides them with stability and certainty of having a premises for a sufficient term. By finalising any new lease, renewals or additional further options, a seller can also avoid the contract of sale of business being dependent or conditional upon the landlord’s approval to extend the lease term or provide further option terms, which is usually in the absolute discretion of the landlord and not within the control of the seller. 

It is the assignor/seller who approaches and seeks the landlord’s consent, although the assignee/purchaser can be included in the negotiation process.

As a buyer, it is important that the terms of the lease be carefully reviewed and that a thorough due diligence be conducted to ensure:

• the premises is suitable for your proposed business and has the appropriate approvals or certification for its use;
• there is no unsatisfied condition under the lease;
• you are able to meet the obligations as the tenant under the lease; and 
• it is commercially viable for you to conduct the business at the premises. 

A buyer should ensure that it has documentary evidence to substantiate its experience in conducting the relevant business and financial ability to meet the obligations under the lease. These documentary evidence could be in the form of the buyer’s financial statement, asset and liabilities statement, business plan, qualifications in conducting the particular business (if applicable) and references. Typically, the landlord will require the buyer to furnish this evidence before considering any request from the seller to assign the lease. 

A buyer should also make enquiries and ensure that there is no unremedied breach of the lease by the seller as at the assignment date. This is because the assignee steps into the shoes of the tenant and takes on all liabilities under the lease from the commencement date, once the lease is assigned. A solution to this would be to limit the assignee’s liabilities under the lease to those from the assignment date. This limitation of liability and even an acknowledgement that there are no liabilities or breaches should be included in the deed of consent to assignment, which is to be entered into by the assignor, assignee and the landlord. 

On the other hand, a seller would want to ensure that it is released from any claims or liabilities under the lease from the assignment date, provided that there is no existing unremedied breach of the lease. This release of liabilities should be included in the deed of consent to assignment. 

Retail Shop Leases 

If the premises is a retail premises as defined in the relevant legislation of the state, there may be specific terms which are implied in the lease pursuant to the relevant legislation and there may be disclosure obligations imposed on the respective parties in relation to an assignment of lease. You should seek professional legal advice to ensure that implied terms under the relevant legislation and disclosure obligations are complied with.

We have extensive experience in the conduct of sale and purchase of businesses and we are able to assist in the pre-contractual review and negotiation, legal due diligence of the business, the transfer of the lease and any other supply and service contracts up until the completion of the sale or purchase of the business. 

If you wish to discuss or require assistance with your business’ sale or purchase, please do not hesitate to contact the writer.

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Lease Assignments in Queensland: Transferring from the Business Owner to the Buyer

Are you selling a business or leased premises? Or struggling with the written assignment? 

In this video John Gallagher navigates the legal intricacies surrounding the assignments of commercial leases in Queensland, providing valuable insights for business owners, landlords, and potential assignees alike.

There are many intricacies of assigning a lease of real estate in Queensland, including the significance of obtaining the landlord's written consent when selling a business conducted from leased premises. The lease included when transferring business real estate will often require you to satisfy the landlord of the assignee's capacity to operate the business.

While a landlord cannot unreasonably withhold consent, the tenant must typically demonstrate the proposed assignee's business experience and financial capacity to operate the business as part of the lease assignment process. 

Landlord's Consent and Its Implications

The landlord's consent is commonly formalised through a deed, including a covenant from the assignee to adhere to the lease terms. 

Crucially, obtaining consent does not automatically release the outgoing tenant from ongoing liability unless explicitly agreed upon by the landlord within the lease assignment. 

In cases where the new tenant defaults after the business sale, the outgoing tenant can still be held responsible for lease breaches.  

Exception for Leases Regulated by the Retail Shop Leases Act

A notable exception is outlined for leases entered after 2016, regulated by the Retail Shop Leases Act . In such cases, the outgoing tenant is automatically released from liability, provided specific disclosure requirements under the Act are met. 

It is paramount that stakeholders be mindful of these disclosure requirements and seek legal advice to ensure compliance and avoid potential pitfalls during the lease assignment process. 

For legal advice regarding commercial or retail leasing , please don’t hesitate to contact the Argon Law team , and visit our website for a series of informative articles and videos.

More Information

• Retail Shop Leases
• Guide to Leasing | For the Commercial Landlord

Related videos as per area of practice:

Lessor disclosure statement: Form 7 (Qld)

Practical law anz standard document w-015-2388  (approx. 4 pages), about this document.

• A prospective lessee when entering into a retail lease.
• A prospective assignee when entering into an assignment of a retail lease in Queensland.
• the lessee at least seven days before the lease is entered into ( section 21B(1) , RLA 1994 (Qld)).
• The assignee at least seven days before the assignment is entered into ( section 22C(1) , RLA 1994 (Qld))
• A waiver notice. This is a written notice in which the lessee or assignee agrees to waive the lessor's obligation to give a disclosure statement by the prescribed disclosure date.
• the terms and conditions of the proposed lease;
• this disclosure statement; and
• the waiver notice to be given by the lessee or assignee.
• Assignor disclosure statement: Form 9 (Qld) .
• Assignor disclosure statement to lessor: Form 15 (Qld) .
• Assignee disclosure statement to lessor: Form 16 (Qld) .
• Form 7 - Lessor disclosure statement (Word format) .
• Form 7 - Lessor disclosure statement (PDF format) ) .

This resource is continually monitored and revised for any necessary changes due to legal, market, or practice developments. Any significant developments affecting this resource will be described below.

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• Assignments of lease by a landlord or tenant – cov…

Assignments of lease by a landlord or tenant – covenants that run with the land vs personal covenants

An important matter which needs to be considered when a lease is assigned by either a landlord (selling the land) or tenant, is which lease covenants are enforceable against a purchaser of the land or an assignee of the tenant.

Generally, lease covenants that run with the land will bind a purchaser of the land or an assignee of the tenant, and covenants which are personal in nature will only bind the original landlord and tenant unless expressly assigned.

Covenants that run with the land

A lease covenant will bind a purchaser of the land or an assignee of the tenant if the covenant ‘touches and concerns’ the land.

Although there is no exhaustive test, generally a lease covenant will touch and concern the land if the covenant:

affects the nature, quality, or value of the land, or the mode of using or enjoying the land; and

is not otherwise expressed to be personal.

Some examples of covenants which 'touch and concern' the land are:

Covenants that are personal in nature

A covenant that is personal in nature will only bind the parties who first entered into the obligation, unless expressly assigned.

Side agreements (including incentive deeds) or licences which grant rights separate to the lease, are likely to be considered as personal and only bind the original landlord and tenant.

Some examples of lease covenants which have been held not to touch and concern the land are:

landlord’s covenant to sell its interest in the land

landlord’s covenant to purchase tenant's fixtures

landlord’s obligation to return the tenant’s security deposit at the expiration of the lease

tenant’s option to purchase the land

Each case will need to be considered depending on the particular facts and the legislation applying in the relevant state.

Assignments of lease by tenants

Most leases require tenants to obtain the prior consent of the landlord and enter into a deed of consent to assignment of lease (under which the tenant assigns its lease covenants to the assignee), before assigning a lease.

In such cases, all the lease covenants are expressly assigned to, and enforceable against, an assignee.

Assignments of lease by landlords

In contrast, leases do not usually contain any restriction on landlords selling the land or any obligation regarding assigning the lease covenants to a purchaser. Unless expressly assigned, only covenants that run with the land are enforceable against a purchaser of the land.

Recommendations

In order to avoid any uncertainty as to which covenants will bind a purchaser of the land or an assignee of the tenant, leases and side agreements should be carefully drafted.

If the parties intend for personal covenants to also bind a purchaser of the land or an assignee of the tenant, an obligation must be imposed on the assignor to ensure that the purchaser/assignee and subsequent purchasers/assignees enter into a deed with the remaining party, agreeing to be bound by and perform all relevant covenants.

Authors: Natasha Zusman and Stella Sun

Contributing author: Melissa Potter

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Lease forms under the Retail Shop Leases Act

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Approved forms under the Retail Shop Leases Act 1994 (effective from 24 January 2022)

Data and Resources

The Lessor disclosure statement must be given to the lessee by the lessor at...

The Lessee Disclosure Statement must be given to the lessor at least 7 days...

If the lease assignment is in connection with the sale of the retail business...

The Financial advice report must be completed by an accountant who is a...

The Legal advice report must be given to the lessor by a prospective...

The lessor must give the lessee an annual estimate of outgoings under section...

 The lessor must give the lessee an annual estimate of outgoings under...

The lessor must give the lessee an audited statement of outgoings annually...

This Assignee disclosure statement must be given to the assignor by the...

This Assignee disclosure statement must be given to the lessor by the...

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Important Considerations in Seeking a landlord’s Consent to Assignment

This article explores the key points which tenants must consider when seeking their landlord’s consent to an assignment of their lease. The topic may conveniently be divided into five sections, as follows:

• has an application for consent was submitted by the tenant? 
• what information can the landlord request in respect of the assignee?
• did the landlord withhold its consent to the assignment?
• was it unreasonable for the landlord to withhold its consent, contrary to s133B of the Conveyancing Act 1919 (NSW) (the Act ) (which provides that, where a lease requires the landlord’s consent to an assignment of the lease, the landlord’s consent must not be unreasonably withheld)?
• will the tenant be released from all future liability under the lease after the assignment?

Has an application for consent been submitted?

The starting point for a tenant is to submit to the landlord (usually) a written request to assign its leasehold interest in accordance with the terms of the lease ( Tenant’s Notice ). The landlord’s obligation to consider the tenant’s request for assignment only arises upon receipt of the Tenant’s Notice. In decision of Tamsco Ltd v Franklins Ltd 1 , the Court emphasised the significance of the tenant actually having to actually request the landlord’s consent. 

This is the case even where ‘the assignee is a person to whom there could be no reasonable objection 2 .  Before the tenant provides information relating to, for example, the assignee’s financial capabilities required for obtaining the landlord’s consent, it must properly communicate its request for consent to the landlord (in compliance with not only the assignment provisions, but also the notice provisions under the lease). 

What information can the landlord request in respect of the assignee?

The starting point here is to consider the terms of the assignment provision of the lease, which should specify the information the tenant must provide to the landlord in respect of the assignee. 

For example, many leases will require the tenant to prove to the landlord that the assignee:

• is a respectable, responsible and solvent person, capable of complying with the terms of the lease; and
• has adequate financial standing not inferior to that of the tenant. 

In this respect, it is common for tenants to provide to the landlord copies of the assignee’s tax returns and balance sheets (to evidence the adequate financial standing and solvency) and references from peers to evidence their responsibility and respectability in operating their business within the relevant industry. 

It should be noted that a landlord may not ‘oppressively demand extensive particulars or insist upon the equivalent of answers to interrogatories’ 3 .  All that is required is fair dealing between the parties to enable the landlord to make a ‘reasonable decision’ 4 .  So, it is important that landlords do not request any information inconsistent with what is permitted by the terms of the lease or which is irrelevant for the landlord making an informed decision in relation to whether its consent should be provided. 

Did the landlord withhold its consent to the assignment? 

The question here is whether after:

• formally requesting the landlord’s consent; and
• submitting to the landlord all information relating to the assignee required by the landlord (as dictated by the assignment provisions in the lease) to assess whether its consent should be provided to the assignment,  the landlord has refused to consent to the proposed assignment. 

In practice, where a landlord refuses to consent to an assignment of the lease, it will serve a notice to that effect on the tenant. However, where landlords are silent on whether they have consented to the assignment, their conduct becomes relevant for consideration. Courts have decided that some landlords, by virtue of their conduct alone, have consented to assignments. This occurred in Chamberlain Group Pty Ltd v Kids for Life Academy Pty Ltd 5 ,  where the landlord, for example:

• had knowledge that the assignee was already occupying the premises and did not object to such occupation; and
• collected rent from the assignee 6 .   

If the landlord did withhold its consent, was it unreasonable for it to do so? 

A landlord will have typically acted unreasonably where it has refused to provide its consent to an assignment for purposes unconnected with the subject matter of the lease 7 . For instance, it is generally unreasonable for a landlord to refuse to provide its consent to obtain a ‘collateral advantage’ which has no relationship with the terms of the lease. 

An example of this may include a landlord making the granting of its consent conditional upon a lump sum cash payment by the tenant to the landlord, an advantage which the landlord would not have otherwise been entitled to under the lease.

Will the tenant be released from all future liability under the lease after the assignment?

For commercial leases, if a lease is silent in relation to whether a tenant is released on assignment, then the tenant will not be released on assignment.  

For example, this will mean that where the assignee fails to pay rent under the lease after the assignment occurs, the landlord may still sue the tenant to recover the unpaid rent. 

If a tenant wants to be released on assignment, it is important for it to include an express release on assignment in the lease agreement or negotiate an express release within the deed of consent to assignment.

What does this mean for tenants?

Tenants must ensure that they have properly communicated to the landlord their request for the landlord’s consent to an assignment of the lease. It is always prudent to prepare the request in writing and serve it on the landlord in accordance with the notice provisions in the lease. 

Where the landlord has considered the request and unreasonably refuses to provide its consent, there are remedies available to tenants. Notably, tenants may seek a declaration by the NSW Supreme Court to the effect that the landlord has unreasonably withheld its consent to the assignment, contrary to section 133B of the Act. 

What does this mean for landlords?

When a tenant makes a formal request for consent to an assignment, landlords must ensure they are not taken to have impliedly (by their conduct) consented to the assignment of the lease. Landlords should:

• promptly acknowledge receipt of the tenant’s request for consent to the assignment; and
• request financial (and other) information relating to the proposed assignee in accordance with the terms of the lease (which, practically speaking, should be done at the same time they acknowledge receipt of the tenant’s request).  

This will equip landlords with all information they require to make a proper and informed decision as to whether they ought to be consenting to the assignment of the lease. However, landlords should note that they should only request information which would have a direct impact on their willingness to provide or withhold their consent. 

Furthermore, landlords must note the importance of ensuring that the tenant is not released on an assignment of the lease. This may also make leased assets more ‘bankable’ and may increase the capital value of landlords’ assets.

Contact us 

If you require any assistance relating to retail and commercial leasing transactions, commercial acquisitions and disposals and other real estate transactions, contact Partner John Frangi on 0417 252 203 or by email . 

1  [2001] NSWSC 1205.  2  Ibid [37].  3  Daventry Holdings Pty Ltd v Bacalakis Hotels Pty Ltd [1986] 1 Qd R 406, 543. 4  Ibid.  5  [2015] NSWCA 241. 6  Ibid [27]–[28].  7  Ashworth Frazer Ltd v Gloucester City Council [2001] UKHL 59 [3].

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Buying a Business: What To Know About Lease Assignment

By Vee Naidoo

Updated on October 26, 2018 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

How are Leases Assigned?

When can a landlord refuse an assignment, key takeaways.

It’s easy to overlook assignment of the lease when buying a business. Business owners mistakenly assume that if the business is changing hands, so to will the lease agreement. This is not, however, the case.

A lease assignment is a process where one business transfers its existing lease to another. The existing tenant must obtain consent from the landlord. This is a formal process, and the landlord can refuse to provide consent in certain situations.

If you are purchasing a business, it’s important to secure the assignment of the lease to avoid uncertainty about the location from which you will operate. After all, no new business owner wants to find themselves in a position where they have to deal with unexpected relocation costs.

This article will explain the importance of securing a lease assignment when purchasing a new business, focusing on the assignment process for retail leases.

State-based legislation governs the process to assign retail leases. Generally, the existing tenant will make an application in writing to the landlord to assign the lease. The landlord will then respond to the request within a specific timeframe. In some states, like NSW, if the landlord fails to respond within a 28 day period, it is automatically taken that the landlord has approved the assignment.

On the other hand, in other jurisdictions such as Queensland, if the landlord fails to respond with a one-month timeframe, a ‘retail tenancy dispute’ will arise. This dispute is then referred to the Queensland Civil and Administrative Appeal Tribunal.

In most states, retail lease legislation protects tenants and prospective purchasers by prohibiting landlords from unreasonably withholding consent to a lease assignment.

Under most retail legislation, a landlord cannot unreasonably refuse consent. Securing an assignment of the lease when purchasing a business may then seem less crucial.

Purchasers should know the ‘reasonable’ grounds on which a landlord can refuse an assignment. We set these out in the table below.

Purchasers should secure an assignment of the lease to ensure the stability of the business’ operations. Generally, landlords cannot refuse consent to an assignment unless it is on reasonable grounds as permitted by the relevant retail legislation and lease terms. It’s important you have a commercial leasing lawyer review the lease to ensure you understand any restrictions placed on the assignment that may affect your decision to purchase the business. If you have any questions, get in touch on 1300 544 755.

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Real estate Australia notes

Changes to property law act impacting queensland leases.

This post is part of the following categories:

By Leone Costigan

In the third and final instalment of our series on Queensland’s Property Law Bill 2023 (the  Bill ), we look at some significant changes coming in the leasing space.

Landlords to act reasonably to tenant requests [1].

Until now, in Queensland, dealings with commercial leases were a matter entirely for agreement between the parties. This position is consistent with the approach taken in other States. So, if a commercial lease included a requirement that the landlord could consent to a tenant request in its absolute discretion, a landlord’s power to consent to that was effectively unrestricted.

This position is to be contrasted with retail leases in Queensland and other States where there are obligations for a landlord to act reasonably in certain circumstances.

In a major change, the Bill proposes that where a tenant is required under a lease to obtain the landlord’s consent to:

• assign the lease;
• sublease or part with or share possession of the premises;
• a proposal to change the use of the premises from that permitted under the lease;
• grant a mortgage; or
• make an alteration,

the landlord must not unreasonably withhold consent .

The provision cannot be excluded by contract and takes away the landlord’s right to provide consent to the tenant’s request, ‘in its absolute discretion’.

While leases often include an obligation on landlords to act reasonably when considering tenant assignment requests, dealings such as changing the permitted use or tenant alterations would be regarded as matters over which a landlord should have complete discretion. Requiring a landlord to act reasonably in these circumstances would be considered unusual and onerous on a landlord.

As a result, only two options will be available for commercial leases:

• an outright ban on one or more of those dealings; or
• an obligation on the landlord to be reasonable when considering requests.

A new deadline for the landlord’s response to a tenant’s request for a dealing listed above will also be imposed: if a tenant seeks the landlord’s consent to a dealing, the landlord has 1 month from receipt of all relevant information to notify the tenant of its decision. However, this timeframe can be extended by agreement (and we expect that some commercial leases may look to extend this period in the assignment and subletting provisions).

The landlord must also provide the tenant with reasons for refusal of consent or imposition of conditions on the dealing.

Leases – assignment of ALL covenants

In another big change which represents a major change to the existing law on the assignment of leases, the assignee will take the benefit and burden of all lease terms whether those terms ‘touch and concern the land’. This change will remove the need for the landlord and tenant to enter into a separate deed of novation or assumption of those particular lease terms. [2]

There are some exceptions to this position:

• if the lease expressly provides that the term is personal to the named tenant; or
• if the lease expressly excludes the relevant term from assignment or transfer; or
• where the outgoing tenant and incoming tenant agree that the benefit of a particular lease term remains with the outgoing tenant (so long as the landlord also consents to that arrangement); or
• where an outgoing landlord and an incoming landlord agree that the benefit of a particular lease term remains with the outgoing landlord.

Commercial leases – release on assignment

The proposal is a two-assignment arrangement, that is, if a tenant ( original tenant ) assigns its lease to tenant 2 ( assignee ), the original tenant and its guarantor are not automatically released.

However, if tenant 2 assigns the lease to tenant 3 ( subsequent assignee ), the liability of the original tenant and its guarantor falls away and they are no longer on the hook if tenant 3 breaches the lease. [3]  This is to be contrasted with the position for retail leases [4] , where the statutory release applies to the original tenant and its guarantor after the first assignment, that is, to tenant 2.

The provisions regarding release on assignment cannot be excluded by contract .  

As a result, in major leases where the identity of the tenant is critical, the wording of the landlord’s consent clause and the suitability of any proposed assignees will become even more important.

New hurdles for landlords – relief against refusal to renew or sell [5]

Under the current Property Law Act, in certain limited circumstances, a tenant could apply to the court for ‘relief against forfeiture’ of its lease. Relief against forfeiture is effectively a court order overturning or blocking a landlord’s right to terminate a lease or evict a tenant.

The Bill introduces new provisions providing relief against forfeiture to tenants where:

• a tenant had a right to renew or extend the lease term or acquire the land on which the premises is located; AND
• the landlord has refused to grant this right due to a failure of the tenant to comply with an obligation or condition in the lease or a notice requirement.

In these circumstances, if the landlord does not intend to grant the tenant’s option or other right, the landlord must first give the tenant a breach notice ( Landlord Notice ). The Landlord Notice must be given within 10 business days of the earlier of the landlord receiving an option exercise notice or becoming aware of a relevant breach occurring.

On receipt of a Landlord Notice, the tenant has one month to apply to the court for relief.

If the tenant does not make an application to the court, the landlord can refuse the tenant’s option to renew or purchase.

In deciding whether to give relief to the tenant, the court may take into account relevant factors which may include the nature of the breaches, the conduct of the parties and the extent to which the landlord has been prejudiced by the breaches being relied on by the landlord.

As you will be aware, there is a long history of courts requiring strict compliance with notice requirements for the exercise of an option – no matter what the mitigating circumstances. With this new provision,

Prepare for a deep dive

There are a large number of changes to the previously long settled property law regime in Queensland which will come into effect when the Bill is passed.

As well as the changes effecting leases outlined above, we have highlighted some of the other major changes over recent weeks. Our first instalment  in this series outlined major changes to the rule against perpetuities as well as signing requirements for deeds and agreements, while our second instalment discussed the changes proposed for land sale contracts and disclosure statements. But there are many more changes as well. While some changes just ‘modernise’ the language, there are also big changes to property law as well as changes to processes and time frames.

Given the impending introduction of this Bill, it is time for property practitioners to take a deep dive so they will be well positioned to advise clients on the new laws.

[1] Clause 142 of the Bill.

[2] Clauses 144 and 140 of the Bill.

[3] Clause 143 of the Bill.

[4] Refer to section 50A of the Retail Shop Leases Act 1994 (Qld).

[5] The Bill, Subdivision 3, clauses 163 to 167.

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Surrender of leases toolkit

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• Definitions

This toolkit brings together everything you need to know about self assessing duty on the surrender of a lease over land in Queensland.

The surrender of a lease over land in Queensland is a dutiable transaction and must be assessed for transfer duty. Whether any amount is payable is dependent on the dutiable value of the lease, which relies mainly on any amounts being paid for the surrender.

An exemption under section 147 of the  Duties Act 2001  applies to the surrender of a lease of land in Queensland if:

• there is no premium, fine or other consideration paid or payable for the surrender or
• any premium, fine or other consideration paid or payable for the surrender is paid by the lessor.

If you believe this exemption applies to a transaction and you are a registered self assessor, you must self assess it.

When the exemption does not apply, you must assess transfer duty on the value of any premium, fine or consideration paid or payable for the surrender.

Assessing a surrender of lease

Here are some tips to help you self assess these types of transactions in  QRO Online .

How to lodge online

You must complete all mandatory data fields under each tab in QRO Online. Mandatory fields are marked with a red asterisk. There are some specific data requirements.

For a surrender of lease

• Select the relevant  Transaction class  from the drop-down list (e.g.  Transfer of non-residential land ).
• Select  Surrender of land in Qld/site area  as the  Type of dutiable transaction .
• Select  Land in Queensland  as the  Type of dutiable property .
• The transferor is the lessee or tenant.
• The transferee is the lessor or landlord.

For a surrender of lease that is exempt from transfer duty under s.147

• Select  Transfer of non-residential land  as the  Transaction class .
• Answer  Yes  to the question:  Is the consideration for this transaction less than the unencumbered value of the property included in this transaction?
• Enter the  Unencumbered value of 100% interest in property  if known; if unknown, enter  $0.00  (nil).
• Select  s.147 exemption surrender of lease  from the  Exemption type  drop-down list.

Records you need to keep

For this type of transaction, you must keep a completed  dutiable transaction statement (Form D2.2) .

Find out more about your  record-keeping obligations .

Also consider…

• Read the  data entry standards for QRO Online .
• Get  help with QRO Online .
• Read  endorsing examples  if you are unsure how to stamp the documents.
• Find out about  approved transactions for self assessors .
• Learn about  other transfer duty exemptions .