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Commercial Leases (Qld)

A commercial lease is a non-residential lease. It is a contract between the owner of a premises (the landlord) and a person (the tenant) who wants to use the premises to run a business. In Queensland, there are two categories of commercial leases: retail and non-retail. Retail leases are for premises which serve customers directly, such as shops, whereas non-retail leases are for premises such as warehouses and factories. Generally, commercial leases are governed by common law so parties  have flexibility to come up with a contract that suits but there is legislation that applies to these contracts, such as the Retail Shop Leases Act 1994.

Negotiating a lease

Before negotiating a lease, a prospective tenant should research the premises thoroughly because the landlord and agent have limited disclosure obligations. A letter of offer or an intention to sign may be presented, and it is important the prospective tenant understands the terms and conditions before signing this.

Short term leases

Short-term leases offer flexibility but carry the risk that the business may not recover its investment. Terms of a short-term lease are usually the same as the terms for a long-term lease.

Long-term leases

Long-term leases offer greater stability than short-term leases but lock in a business to pay rent when the business may not be able to trade. Leases of more than 3 years require registration with the Titles Registry .

Lease terms

The parties to the lease can negotiate its terms and conditions, considering factors such as:

• protection from competition, especially if the premises is in a shopping centre which has shops owned by the same landlord;
• an option to expand or diversify;
• outgoings payable and when they are due;
• clauses that may interfere with the usual running of the business;
• a right to renew or end the lease before it expires;
• an option to sub-let;
• a right to transfer or assign the lease;
• any impact a lease might have on a franchise agreement.

Commercial leases usually require the tenant to maintain the premises in good repair, which includes cleaning, repairing or replacing fixtures or fittings, and maintaining service infrastructure such as pipes or wiring. Structural maintenance is usually the responsibility of the landlord.

A landlord will often require a tenant to pay lease registration fees, mortgage consent fees and other charges such as authority approvals to operate from the premises.

Retail shop leases

To qualify as a retail shop lease, the business must be located within a retail shopping centre (a site with 5 or more businesses) , and the premises is used wholly or predominantly for the carrying on of a retail business.

A lease for a retail business must abide by the Retail Shop Leases Act . If any lease terms are inconsistent with the Act , the Act prevails. There are, however, some situations to which the Act does not apply, such as when:

• the business is a service station;
• the premises has a floor area or more than 1000sgm and is leased by a corporation or its subsidiaries;
• the shop is a temporary stall a trade show or cultural event;
• the premises is leased from the South Bank Corporation and the leases are perpetual or for longer than 100 years;
• the premises is within a theme park or amusement park;
• the lease is for an automatic teller machine or vending machine;
• the lease is for storage or parking.

The Act confers benefits and protections for a tenant, including restrictions on outgoings and rent reviews, and early determination of current market rent if there is an option to renew or extend the lease.

There is no minimum term for a lease to be considered a retail lease.

There are several key considerations for retail shop leases, including disclosure statements, money and ratchet clauses, and options ad renewals.

Disclosure statements

A landlord must provide a tenant with a disclosure statement that details important terms such as an estimate of outgoings. The landlord must provide this, and a copy of the proposed lease, at least 7 days before the tenant enters the lease. They must also provide to the tenant a certified copy of the signed lease within 30 days of it being signed.

Money and ratchet clauses

A landlord cannot request “key money” from a tenant in return for the grant, assignment or renewal of a lease. Also, any security deposit collected from a tenant must be refundable. A ratchet clause is one which prevents a reduction in rent. Such a clause is also prohibited.

Options and renewals

An option to renew is different to a lease renewal. An option to renew is a specific clause in the lease which entitles the tenant to renew the lease. If there is no option, or all options have been exercised, a new lease must be sought. In this case, if the lease is for less than 1 year, the landlord must advise the tenant at least 3 months before lease expiry whether renewal is possible and on what terms. If the lease is for more than 1 year, the period extends to 6 months.

For advice or representation in any legal matter, please contact Armstrong Legal .

This article was written by Sally Crosswell

Sally Crosswell has a Bachelor of Laws (Hons), a Bachelor of Communication and a Master of International and Community Development. She also completed a Graduate Diploma of Legal Practice at the College of Law. A former journalist, Sally has a keen interest in human rights law.

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ASSIGNMENT OF TENANCY AGREEMENT WITH CONSENT OF LESSOR

THIS ASSIGNMENT OF TENANCY AGREEMENT dated this ________ day of ________________, ________

_________________________

(the "Assignor")

OF THE FIRST PART

_______________________

(the "Assignee")

OF THE SECOND PART

• This is an agreement (the "Assignment") to assign a residential tenancy agreement in real property according to the terms specified below.
• The Assignor wishes to assign and transfer to the Assignee that tenancy agreement (the "Tenancy Agreement") dated May 8, 2024, and executed by the Assignor as tenant and by _________________________ as lessor (the "Lessor").

IN CONSIDERATION OF the Assignor agreeing to assign and the Assignee agreeing to assume the Tenancy Agreement for the Premises, and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, both parties agree to keep, perform and fulfill the promises, conditions and agreements below:

• The Tenancy Agreement governs the rental of the following described premises (the "Premises") to the Assignor: ______________________________________________
• Assigned Tenancy Agreement
• The Assignor assigns and transfers to the Assignee all of the Assignor's right, title, and interest in and to the Tenancy Agreement and the Premises, subject to all the conditions and terms contained in the Tenancy Agreement.
• Effective Date
• This Assignment takes effect on May 9, 2024 (the "Effective Date"), and continues until the present term of the Tenancy Agreement expires on May 10, 2024.
• Assignor's Interest
• the Assignor is the lawful and sole owner of the interest assigned under this Assignment;
• this interest is free from all encumbrances; and
• the Assignor has performed all duties and obligations and made all payments required under the terms and conditions of the Tenancy Agreement.
• Breach of Tenancy Agreement by Assignee
• Consent to this Assignment will not discharge the Assignor of its obligations under the Tenancy Agreement in the event of a breach by the Assignee.
• In the event of a breach by the Assignee, the Lessor will provide the Assignor with written notice of this breach and the Assignor will have full rights to commence all actions to recover possession of the Premises (in the name of the Lessor, if necessary) and retain all rights for the duration of the Tenancy Agreement provided the Assignor will pay all accrued rents and cure any other default.
• Governing Law
• It is the intention of the parties that this Assignment, and all suits and special proceedings under this Assignment, be construed in accordance with and governed, to the exclusion of the law of any other forum, by the laws of Commonwealth of Australia, without regard to the jurisdiction in which any action or special proceeding may be instituted.
• Miscellaneous Provisions
• This Assignment incorporates and is subject to the Tenancy Agreement, a copy of which is attached hereto, and which is hereby referred to and incorporated as if it were set out here at length. The Assignee agrees to assume all of the obligations and responsibilities of the Assignor under the Tenancy Agreement.
• This Assignment will be binding upon and inure to the benefit of the parties, their successors, assigns, personal representatives, beneficiaries, executors, administrators, and heirs, as the case may be.
• All rents and other charges accrued under the Tenancy Agreement prior to the Effective Date will be fully paid by the Assignor, and by the Assignee after the Effective Date. The Assignee will also be responsible for assuming and performing all other duties and obligations required under the terms and conditions of the Tenancy Agreement after the Effective Date.
• There will be no further assignment of the Tenancy Agreement without the prior written consent of the Lessor.

IN WITNESS WHEREOF the Assignor and Assignee have duly affixed their signatures under hand and seal on this ________ day of ________________, ________.

Signatures to the Agreement This agreement is made on the ________ day of ________________, ________ .

CONSENT OF LESSOR

The Lessor in the above Assignment of Tenancy Agreement executed on the ________ day of ________________, ________, consents to that Assignment. The Lessor also agrees to the Assignee assuming after May 9, 2024, the payment of rent and performance of all duties and obligations as provided in the Tenancy Agreement.

Last Updated February 27, 2024

Lease Assignment Agreement Information

Alternate names:.

A Lease Assignment Agreement can also be referred to as a/an:

• Assignment of Lease
• Deed of Assignment of Lease

Lease Assignment

• Lease Assignment Contract
• Transfer of Lease
• Assignment of Tenancy Agreement

What is a Lease Assignment Agreement?

A Lease Assignment Agreement is a legal contract that tenants use to transfer their interest in a residential or commercial lease to someone else (the assignee). This means that the original tenants forfeit their rights to be tenants under the lease and the assignee becomes the new tenant of the rental property.

Who are the parties in a Lease Assignment?

The parties in a Lease Assignment Agreement are:

• Assignor: the tenant from the original Tenancy Agreement who is transferring their interest in the agreement to another person, corporation, or organisation
• Assignee: the person, organisation, or corporation who takes over the interest in the rental property
• Landlord: the person or organisation who owns the rental property

What kind of leased property can be transferred with a Lease Assignment Agreement?

A Lease Assignment can be used to transfer the lease to any type of property used in a Residential or Commercial Lease, including:

• Office spaces
• Retail spaces (and more)

Do I need my landlord's permission to assign my lease?

Yes. In most cases, you will need written consent from your landlord to assign your lease to someone else.

The only time you may not need your landlord's permission to assign your lease to another person is if the original Tenancy Agreement explicitly permits that the tenant can assign the lease without the landlord's permission.

It is best to obtain written consent from the landlord when assigning either a commercial or residential lease.

What is the difference between subletting and assigning a lease?

Subletting is when a tenant transfers part of their rights and obligations in a lease contract to a third-party (a subtenant) but remains responsible for the original lease. Typically, the transferred responsibilities to the subtenant are only for part of the leased space (e.g. renting a specific room in the apartment suite) or for part of the lease term (e.g. renting the entire apartment to the subtenant for one month out of a yearly lease).

In a sublease, a new lease agreement is created where the original tenant acts as the landlord and the subtenant acts as the new tenant. However, the original tenant is still liable for the lease to the original landlord. For example, if rent isn't paid on time by the subtenant, the original tenant can be subject to consequences (like an eviction notice) from the original tenant's landlord.

In a Lease Assignment, the original tenant transfers all their rights in the lease agreement to the assignee. A new lease is not created, the original lease is simply transferred to a new person. The assignee will typically interact directly with the landlord (e.g. to pay rent, request repairs and maintenance, etc.), but the original tenant can still be held liable on the lease unless the landlord releases them of their liability.

Why should I use LawDepot's Australian Lease Assignment form?

LawDepot's Lease Assignment Agreement can be customised for most Australian states and territories, including:

• Australian Capital Territory (ACT)
• New South Wales (NSW)
• Northern Territory (NT)
• Queensland (QLD)
• South Australia (SA)
• Tasmania (TAS)
• Victoria (VIC)
• Western Australia (WA)

LawDepot's online Lease Assignment form allows you to customise:

• Party information (assignor, assignee, and landlord details)
• Original Tenancy Agreement information (start and end dates of the original lease, the date the lease was signed, address of the property, etc.)
• Liability details (who is liable if the assignee breaches the terms of the Tenancy Agreement)
• Landlord's consent to assign the lease (whether or not the landlord is attaching written consent to the assignment or has already provided written consent prior to completing the assignment document)

With LawDepot's online legal forms, you also have the capability to add additional clauses unique to your situation that might not have been addressed in the questionnaire.

Related Documents:

• Commercial Lease Agreement : a contract that creates a commercial tenancy between a landlord and a business tenant
• Lease Amendment : a form used to make changes to an existing Tenancy Agreement without completely negating the original contract
• Lease Notice : a notice that a landlord gives to a tenant that provides the option to be evicted or resolve an issue like a lease violation
• Residential Tenancy Agreement : a contract that outlines the terms of a residential tenancy and details the rights, responsibilities, and obligations of the tenant(s) and the landlord(s)

Frequently Asked Questions:

Personalise your Lease Assignment. Print or download in minutes.

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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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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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LEASE – ASSIGNMENT OF A RETAIL SHOP LEASE

When you are considering buying or selling a business which is currently operating under a retail shop lease, it makes sense that the transaction would necessarily include the assignment or transfer of the retail shop lease from the existing business owner to the incoming purchaser.

Our lawyers have previously written an article on the difference between retail shop leases and commercial leases (which you can read here ), however this article is specifically written to provide information on the process to have a retail shop lease transferred to an incoming purchaser, and the steps that need to be taken under the relevant legislation.

The Retail Shop Leases Act 1994 (Qld) (RSLA) sets out the process of assigning a retail shop lease, including the pre-assignment procedures, disclosure requirements, legal/financial advice requirements and other miscellaneous general provisions which are applicable to retail shop leases.

Generally speaking, the assignment of a lease is required when the existing tenant is unable to complete the term of their lease, and seeks to transfer the time that is left on the lease to another party, for example the incoming purchaser. Essentially, the assignment results in the purchaser stepping into the original tenants shoes for the remainder of the lease rather than the creation of a new lease by way of a sub-lease.

Further, most Retail Shop Leases require the prospective purchaser to obtain a Legal Advice Report and a Financial Advice Report prior to signing the lease (if you have less than 5 retail leases under your belt).  Our Gold Coast team have a multitude of experience in this area, and are able to provide you with this Legal Advice Report if needed.

It is often a pre-requisite to the assignment of a retail shop lease that the landlord provides their consent to the assignment, and the lease will generally set out the way that this must occur, i.e. the notice period, whether the request must be in writing etc and a failure to do so may invalidate the request and could also be regarded as a breach of the lease.

The legislation also outlines specific disclosure obligations which must be conducted in accordance with strict timeframes before an assignment of the lease can be entered into.

These disclosure obligations include the current tenant providing a disclosure statement and copy of the current lease to the proposed assignee, at least 7 days before the proposed assignee signs a business sale contract or the day on which the current tenants asks the landlord to consent to the proposed assignment of the lease, whichever occurs earlier.

In addition, the landlord must also provide a Lessor Disclosure Statement to the proposed assignment which mirrors the disclosure statement given by the current tenant, however it is provided from the point of view of the landlord and includes further information about the lease, the retail shop premises and the calculation of the rental payments.

If the tenants or the landlord’s disclosure statements are provided out of time, then there are ways to rectify the issue, however it is best practice to abide by the timeframes as stipulated, if possible, to avoid possible complications and/or increased costs.

As part of the disclosure requirements, the proposed assignee must also provide a disclosure statement to the current tenant, which should be provided before the current tenant seeks the consent of the landlord to the assignment.

Upon the current tenant seeking the landlord’s consent to the assignment, a copy of the disclosure statement which was provided to the proposed assignee will also be provided to the landlord.

In this way, the preliminary disclosure between all parties (landlord, current tenant and proposed tenant) should provide sufficient information and assurance to the parties in order to proceed with the assignment of the lease.

There are various compensation provisions detailed under the RSLA which may apply to circumstances where disclosure statements have been defective/false/misleading, and have resulted in the entry into, or the assignment of a lease.  Requirements to pay compensation in those circumstances include the landlord and can extend to existing tenants as well as the incoming/prospective tenant.

Does the landlord have to provide consent?

The terms and conditions contained in the lease, and implied terms under the relevant legislation, will determine whether the landlord has the ability to decline to consent to the proposed assignment.

Generally speaking, the landlord must not ‘unreasonably withhold’ consent to a proposed assignment, however the test to determine what is ‘reasonable’ is objective, and there is no definitive rule which will apply. Essentially, it will come down to the individual circumstances of the case.

We can however look at some of the Court’s historical decisions to see what has previously been considered as reasonable grounds for the refusal of consent, and use these as a guideline when contemplating an assignment of a lease.

Such grounds have included:

–          the ability for the proposed tenant to be able to fulfil the tenants obligations under the terms of the lease (i.e. are they a ‘respectable and responsible’ person);

–          whether a proposed assignment is likely to affect the redevelopment interests in the property that the landlord has, or their capacity to lease out other parts of the property;

–          a possible depreciation or reduction in the value of the land;

–          where there is a potential negative impact on the commercial reputation of the landlord amongst future lessees.

In any event, if you are contemplating entering into a Retail Shop Lease, or you are looking at buying or selling a business to which the RSLA applies, we strongly recommend that you contact one of the experienced property lawyers at Affinity Lawyers today to obtain independent legal advice as to your rights and obligations.  Please contact us today on 07 5563 8970.

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Signing a business premises lease

Tenancy costs tend to be one of the main overheads for small businesses. Disputes between landlords and tenants are common and often arise from small business owners not seeking advice or not understanding the significant impacts a lease can have on the financial viability of their business. Knowing who you are dealing with and what else is available before signing a business lease can help to avoid letting your heart rule your head in this critical business decision.

Before you sign a lease, you need to be confident that you understand and can meet all the terms and conditions. To find out if the lease is suitable for you, and to avoid expensive misunderstandings that could cost you money and potentially your business , consider these questions and discuss the answers with your solicitor and financial adviser.

Lessor or lessors agent

• Does your contract say a lot but actually tells you very little?
• Are you left wondering what it's all about?
• Do you get the feeling that information is being withheld?
• Are you immediately pressured to sign on the spot?
• Is the discussion relaxed – no pressure to sign – with time for you to properly consider things and take appropriate advice?
• Who pays the legal costs for establishing the lease?
• When does the lease start? What time period does it cover?
• Will the lease period give you time to make enough profit to get a reasonable return on your investment?
• Can both parties engage a specialist retail valuer if there is a dispute over market rent?
• What is the rent? Is it paid weekly, monthly or in advance?
• Is a deposit or other payment required?
• How are rent increases worked out?
• What happens if rent payments are late?
• Do you have an option to buy the premises?
• Can you renew the lease? When, and for how long?
• Can you end the lease before it expires? If so, what are the conditions?
• Is subletting possible? If so, what are the conditions?
• Can you transfer the lease? Are any expenses involved?
• Are there additional charges for outgoings such as rates, taxes, garbage, air conditioning or marketing? How are these charges worked out?
• Have you considered expenses such as electricity, cleaning, repairs, maintenance and refitting?
• Who is responsible for taking out the various types of insurance ?

Restrictions

• Are there restrictions on the type of business, its goods or trading hours?
• When you leave the premises, can you remove fixtures, fittings or furnishings you have put in?
• Will any lease terms affect the ongoing profitability of your business?

Maintenance

• Does the lease require you to maintain the premises? At whose cost?
• Can alterations or improvements be made to the premises by either party? Are there conditions?
• Do you have to return the premises to pre-lease condition?

Assignee/assignor involvement

• Has the assignor* got written approval for the assignment of the remainder of the lease?

*If you are buying a business and the seller has a lease as part of that business, they are known as the assignor. The assignor requires approval from the landlord for the assignment of the remainder of the lease to the purchaser of the business (assignee).

Also consider...

• Learn more about working with business advisers .
• Find out more about retail shop leasing .
• Read the Retail Shop Leases Regulation 2016 .
• Find retail shop leases forms .
• Read a legal guide to business leases from the Queensland Law Society.
• Learn out how to conduct financial forecasting for the future of your business.
• Watch our Understanding tenant agreements webinar to learn about the common pitfalls of business tenancy.
• Last reviewed: 7 Jan 2021
• Last updated: 1 Feb 2022
• Print topic

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Articles > Commercial Property

How Can I Transfer or Assign a Commercial Lease?

June 7, 2021   Dean Wolman Philip Evangelou

In certain cases, a tenant can choose to exit their commercial lease prior to the end of their lease term by either transferring or assigning the lease to another party, known as the assignee. Transfers or assignment of leases require explicit permission for this mechanism in the original lease. Assuming it does exist however, this scenario usually occurs when a tenant sells their business to another party (who agrees to accept the current lease rather than entering into a new one with the landlord), or when a tenant wishes to exit their lease and finds a party willing to take on the existing lease. 

Process of transferring a Commercial Lease

The first steps involved in exiting a commercial lease and considering assignment include:

• Reviewing the current lease to determine whether it can be transferred or assigned; 
• Determining what requirements must be fulfilled to obtain the landlord’s consent; and
• Communicating with the landlord to obtain their consent to be able to assign the lease. 

The landlord must approve of the proposed tenant whom the existing tenant wishes to assign the lease to. The landlord will determine their approval by assessing whether the new tenant can pay rent as well as deciding if the new tenant is the appropriate fit. A landlord will generally ask that the proposed new tenant provides both financial and business references to perform this assessment. 

Deed of Assignment 

Once the landlord’s consent is obtained, a legal document known as a deed of consent and assignment will be developed. The deed of consent transfers all obligations of the current tenant under the existing lease, to the new tenant. 

A deed of consent includes:

• Confirmation of the landlord’s consent to transfer the lease 
• An agreement from the existing tenant to transfer their entire interest in the lease to the new tenant. This will include a specified date of transfer (date of assignment) 
• The new tenant agrees to undertake all rights and obligations of the lease from the date of transfer. 

The Current Tenant

For the successful transfer of a commercial lease, the current tenant must be relieved from all rights and obligations under the lease from the specified transfer date. To ensure this occurs:

• A deed of assignment will legalize the tenant’s relief from any claims or liabilities under the lease, from the date of transfer. 
• Any security provided by the exiting tenant will be refunded.

It is important to remember that the tenant is bound to the terms of the lease and is required to fulfill their obligations until the completion of the deed of assignment and subsequent formal transfer of the commercial lease. 

The Proposed New Tenant

The proposed new tenant’s approval to take on the commercial lease is dependent on the landlord’s acceptance of the lease transfer. This approval is specified in the deed of assignment whereby the landlord accepts the proposed new tenant as assignee from the specified date of transfer. Prior to entering the commercial lease, there are a number of things that the incoming tenant should consider. These include: 

• Reviewing the contents of the existing lease prior to signing the deed of assignment
• Ensuring that the terms of the lease are reasonable and that sufficient security and tenure is provided 

What happens if the lease being transferred is a Retail Lease? 

If the lease being transferred takes the form of a retail lease, the tenant will be required to give the new tenant (assignee) a disclosure statement. A disclosure statement will detail any changes agreed to by the landlord during the duration of the lease. 

The disclosure statement provides the assignee with information that is essential to consider including:

• The terms of release and any renewal options;
• proposed commencement date of the lease
• details of the premises; 
• the requirements to use the premises;
• Annual base rent payable under the lease; and 
• Outgoings payable under the lease 

A tenant is entitled to request an up to date disclosure statement prior from the landlord, prior to transferring the commercial lease. The landlord has an obligation to fulfill the tenant’s request. This must be provided within a specific time frame, usually 14 days after the tenant makes the request. 

Failure to provide a disclosure statement may result in consequences. However, these consequences often differ between states and territories. Consequences may include:

• The assignee withholding their rental payment;
• The assignee seeks compensation from the landlord; or
• The assignee terminates the lease prior to the end of the lease term.

Parties entering into a commercial lease must be aware of the specific requirements and consequences of disclosure statements, within their particular state. 

Do you need to pay stamp duty? 

In NSW it is essential that you pay stamp duty upon assigning a commercial or retail lease. Stamp duty is a tax imposed on the purchase of assets and transactions of property. The value of stamp duty required to be paid depends on whether there is any money involved in the transfer. 

Should the commercial lease transfer not involve any form of monetary payment, the exiting tenant is still required to pay the NSW Office of State Revenue a nominal $10 fee. It is essential that this stamp duty fee is paid to ensure that the transfer is accepted. 

Failure to pay this nominal stamp duty will delay the transfer of the commercial lease. 

What to take away from this article?

A tenant who wishes to exit their commercial lease can either transfer or assign this lease. It is essential that the tenant is aware of their rights and obligations under the lease and the process involved with transferring the lease to a proposed new tenant. Additionally, it is important to consider that a transfer requires the approval and consent of the landlord. Should the transfer take the form of a retail lease, there are a number of additional requirements that need to be fulfilled, including a disclosure statement. To ensure a smooth commercial lease transfer, it is imperative that you familiarise yourself with a deed of assignment and the requirements necessary for it to be satisfied. 

If you have any questions regarding the transfer or assignment of a commercial lease or require assistance with any aspect of commercial property, get in touch with us via the contact form or by calling 1300 337 997. 

About Dean Wolman

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About Philip Evangelou

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Related Articles

Deed of assignment of lease and landlord's consent (Qld) | Practical Law

Deed of assignment of lease and landlord's consent (Qld)

Practical law anz standard document w-029-1902  (approx. 41 pages).

When We All Understand the Assignment: Assigning a Retail Shop Lease as Part of a Commercial Business Sale

Posted in: Business Law , Commercial Lease

An easily overlooked element of a commercial business sale is that of assigning the existing lease, which is key in enabling the buyer to continue operating the business in the same premises where the seller currently resides. While the steps involved, in assigning the existing lease, may be relatively straightforward the time and effort in meeting the legislated disclosure requirements can become a hefty hurdle when approached haphazardly.

Under the Retail Shop Leases Act 1994 (Qld) (‘The Act’) , there are a multitude of time specific disclosure requirements to be undertaken by the seller (Lessee/Assignor), the buyer (Prospective Tenant/Assignee), and the landlord (Lessor) to ensure the assignment is binding. A failure of any party to meet these disclosure requirements within the specified time periods may result in an unenforceable agreement, entitling the Buyer or Landlord to terminate the assignment of lease, leaving the Seller high, dry and in breach of the sale contract.

With adherence to these disclosure details and time frames required under all retail shop leases (defined in section 5A of The Act ), it is highly advantageous for all retail business owners to have at least a basic understanding of what is expected when seeking an assignment of your lease.

Generally speaking, when entering into a retail shop lease, the key questions and considerations made by a business owner typically focus on matters that directly impact the daily operations and profitability of their business, such as:

• onboarding costs of bond, prepayment of rent, solicitors, insurances, fit-out, etc
• day to day costs of rent, outgoings, maintenance (including air-conditioning servicing), etc
• The length of the lease period and whether further options are available;
• Any building covenants or restrictions on use of the premise; and
• Consideration of instances where a ‘force majeure event’ such as Covid-19, or extensive damage to the property, as evidenced by the recent floods, results in it becoming unusable for the initially leased purpose.

While all of these elements are at the core of what could make or break a business’ success in a leased space, an important aspect that can be easily overlooked by a new Lessee are the steps required in assigning a lease when the time comes to sell their business.

Understandably, the last thought on a new business owner’s and/or prospective lessee’s mind is related to selling the business. However, knowing in advance what is involved to transfer a lease may be the key to avoiding missteps, unexpected delays, and unnecessary costs impacting the business owner’s sale proceeds or even leading to the potential collapse of the contract of sale.

The steps, while easy enough to be managed with sufficient planning and time, when rushed can be time consuming and unexpectedly burdensome to an unprepared Lessee simply looking to get the best price from the sale of their business.

Disclosure Requirements under the Act

As required under the Act, the following disclosures need to be completed to assign a lease in Queensland:

• The Lessor must complete a “Lessor disclosure statement to Assignee”, which provides details of the Lease and other relevant tenancy details.

2. The Assignor must complete an “Assignor disclosure statement to Assignee”, which outlines details of the lease and other relevant tenancy details.

a. With it, the assignor must provide a copy of the Lease, and any amendments and/or previous assignments.

b. This disclosure is to be provided a minimum of 7 days prior to the Assignor requesting the Lessor’s consent to the assignment of the lease unless a waiver is provided.

3. The Assignee must complete an “Assignee disclosure statement to Assignor” which requires disclosure of relevant details of the Assignee to facilitate the Lessor’s assessment of whether they are a fit and proper lessee.

a. This disclosure must also be provided a minimum of 7 days prior to the Assignor requesting the Lessor’s consent to the assignment of lease.

4. The Assignee must complete an “Assignee disclosure statement to Lessor”. Part of this disclosure requires a duly executed Legal Advice Report and Financial Advice Report.

a. These two reports are to verify that the Assignee has received the relevant legal and financial advice prior to agreeing to consent to the assignment of the existing Lease.

b. It should be noted that these reports are not necessary for a “Major Lessee”, that being a Lessee / Assignee who is a lessee of 5 or more retail shops in Australia.

As noted above, in lieu of meeting the required 7-day minimum disclosure periods, a Waiver Notice (waiver) may be provided by the relevant party. In providing a waiver, a Non-Major Lessee must also produce a legal advice report verifying that they have received legal advice regarding the implications of their waiver.

Once all the above have been provided in accordance with the relevant time periods or accompanied by a waiver, a Deed of Assignment can be executed by all parties to the lease. This deed will generally outline the conditions upon which the buyer will be taking over the existing lease, including binding them to the existing lease in place of the assignor, as well as outlining the obligations of the assignor (if any) upon completion of the assignment.

Why go through the trouble?

Beyond being a legislative requirement to ensure the assignment is legally binding, a major benefit that results from adherence to The Act’s assignment disclosure requirements is brought about through section 50A. Section 50A releases an assignor (and any existing guarantor/s) from all liabilities or obligations that arise under the lease after the date of assignment, regardless of the terms contained within the Deed of Assignment. It is this specific section that makes all of the assignor’s efforts in adhering to the Act’s disclosure requirements worthwhile, as it effectively provides the assignor with a legislative release from all future lease liabilities post-assignment date.

While the extent of information required to meet the above disclosure requirements will differ depending on the parties involved, considerable time and resources will likely be exhausted in ensuring all elements of the above steps are met. Specifically, if a seller is not sufficiently prepared, the time required for parties to collect information, receive legal and financial advice, ensure all documents are duly formatted and executed and the eventual protracted correspondence between all parties, can easily result in key dates being missed or delayed, putting the entire business sale at risk of collapse.

Although an assignment of a lease may only be a small portion of a business sale, due to the number of steps requiring prudent action from all parties involved, there are ample opportunities for unexpected delays to occur. By knowing in advance what is required to complete these steps, a Seller can take early action to ensure all required information is prepared, easily accessible, and ready for production as soon as possible in the sale process.

If you are looking to buy or sell a business or are looking to enter into or renew a lease, our team can assist in ensuring you are prepared in advance and your interests are protected.

Tagged in: assignment of lease , business , business contracts , Business law , Contracts

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Tenancy agreements

Rental law changes introducing minimum housing standards came into effect for new tenancies (including renewed tenancy agreements) from 1 September 2023, and will come into effect for all remaining tenancies on 1 September 2024.

What is a tenancy agreement?

A tenancy agreement – also known as a lease – is a legally binding contract between a property manager/owner and a tenant/resident.

It outlines each party’s legal rights and responsibilities throughout the duration of the tenancy, including the standard terms set out in the Residential Tenancies and Rooming Accommodation Act 2008 and any additional special terms agreed to by both parties. A tenancy agreement must be:

• documented in writing
• provided by the property manager/owner to the tenant/resident either on, or before, the day the tenant/resident occupies the premises and before any monies are paid
• accompanied by a copy of either the Pocket guide for tenants – houses and units (Form 17a) or Pocket guide for tenants – caravan parks (Form 17b) .

It is an offence not to provide the tenant with a written agreement.

Property managers/owners are responsible for covering the cost of preparing the agreement, which must be written in a clear and precise way.

If a tenant/resident is occupying a premises without a written tenancy agreement, they still have legal protections under Queensland’s tenancy laws and can contact the RTA for support.

Types of tenancy agreements

The Act includes provisions for:

• General tenancy agreements Used when renting a house, unit, apartment, townhouse, houseboat, or secondary dwelling.
• Moveable dwelling agreements Used when renting a caravan, moveable dwelling or site.
• Rooming accommodation agreements Used for boarding houses, supported accommodation services, off-campus student accommodation and other rooming style accommodation.

The Act does not apply to:

• contracts of sale or mortgages if the sale of contract is for 28 days or less
• holiday lettings (e.g. Airbnb)
• rental purchase plan agreements
• temporary refuge accommodation (e.g. a women’s shelter)
• commercial property (e.g. shop leases)
• renting outside of Queensland.

What's included in a tenancy agreement

All tenancy agreements must include:

• the name and address of the property manager/owner and tenant/resident
• the start and end date of the agreement (or state that it is periodic)
• how the tenant should pay rent and how much is to be paid
• contact details for nominated repairers
• standard terms outlined under the Act
• any special terms (these should be agreed in advance, e.g. who is responsible for pool maintenance).

1 September 2023 Rental law changes

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Rental law changes

Learn more about new rental laws 

Property Law Act 2023 (Qld) – Changes to leasing

The Property Law Act 2023 (Qld) (PLA) was passed on 25 October 2023 and will commence on a date set by proclamation (to be announced soon) with changes set to impact both lessors and lessees. Many of the changes cannot be contracted out of and will apply regardless of when the lease was entered into. These important changes include:

New lessor’s consent procedure

• the lessee to give the lessor a proposal notice; and
• make a decision within one month (unless an extension is agreed within that time) of receiving all relevant information;
• if consent is given, state any conditions and the reason for them, or if consent is refused, give reasons for its refusal, in a decision notice; and
• not unreasonably withhold its consent.
• A mechanism is now included to allow the lessee to apply to the court if the lessor fails to make a decision or if the lessee believes that the lessor has acted unreasonably or has imposed a condition that is unreasonable, unnecessary or onerous.
• assign, sublease, part with or share the premises;
• change the permitted use;
• mortgage the lessee’s interest; or
• make alterations or carry out work.

Release of lessee and any guarantor on a subsequent assignment

• One key change relates to the liability of a lessee once the lease is assigned.  A new provision inclusion releases the original lessee and its guarantor on a subsequent assignment (i.e. if Lessee A assigns the lease to Lessee B, and then Lessee B subsequently assigns it to Lessee C, Lessee A and its guarantor (if any) will be released from any liability to the lessor for a breach of the lease by Lessee C).

Assignment of leases – enforceability of covenants

• the term is expressed to be personal;
• the term is expressly excluded from the assignment or transfer;
• in the case of an assignment, the current lessee and the new lessee agree that the term should remain with the current lessee; or
• in the case of a transfer, the current lessor and the new lessor agree that term should remain with the current lessor.

Lessee’s right to apply for relief against lessor’s refusal to renew or sell

• the notice exercising an option to renew (or extend), or to purchase the reversion of, the lease is given; or
• the breach, if a breach occurs after that option notice is given, if the lessor intends to refuse to renew or sell.  The lessee will have one month after the breach notice is given to apply to the court for relief.
• failure to fulfill a condition precedent;
• breach of the lease; or
• non-compliance with a formal requirement (e.g. when notice has been given on time, but other formal requirements under the lease have not been met).

Additional rights for each designated person

• The PLA specifies a list of people, in addition to the lessee, who may apply for relief against forfeiture for breach or relief against refusal to renew or sell (e.g. a mortgagee or receiver of the lessee’s interest, (in the case of relief against forfeiture) a sublessee, etc.).
• There is a new obligation on the lessor to give a copy of any notice to remedy breach or breach notice to each designated person.

As many of the changes introduce new procedures, notice requirements or time frames (or a combination of all of these), it is essential that both lessors and lessees are aware of their rights. 

Lessors will also need to update their lease to reflect this legislative change and to ensure its terms are optimal (e.g. to ensure that adequate security exists on a subsequent assignment).  Additionally, other documents and leasing practises may need to be updated (e.g. to ensure that rights and obligations of each party are appropriately allocated on assignment or sale).

It is important to understand how these changes can impact your leasing business.

Please contact the McCullough Robertson Real Estate team for details about the changes introduced under the Property Law Act 2023 (Qld) and to find out how they impact you.

This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.

About the authors

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Kristan Conlon

Sharon Chan

Catherine Collins

Serena Paramananthan

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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.

• Organisations
• Employment, Small Business and Training
• Lease forms under the Retail Shop Leases Act

Form 9 - Assignor disclosure statement

• Download (261.5 KiB) (PDF)

URL: https://www.publications.qld.gov.au/dataset/0eb3e209-a068-41c9-b2e0-ff2beba1fa3b/resource/287cfa5d-1fed-4c76-af1d-0823e3d44700/download/approved-form-9-assignor-disclosure-statement.pdf

If the lease assignment is in connection with the sale of the retail business by the assignor to the assignee, the Assignor Disclosure Statement must be given to the assignee at least 7 days before the assignee enters into the contract for the sale of the business. In any other case, the Assignor Disclosure Statement must be given to the assignee at least 7 days before the lessor is approached to consent to the assignment.

Additional Information

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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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 )

Assignment Of A Lease

Changes under the retail shop leases act.

Are you fully aware of your disclosure obligations under the Retail Shop Leases Act 1994 ?

If you are buying or selling a retail business with a lease, or if you are a landlord involved in such a transaction, it’s important that you are aware of your disclosure responsibilities under the Retail Shop Leases Act 1994 (the Act) . There have been recent changes to the Act so even if you are familiar, this article is a good opportunity to refresh your knowledge.

As a starting point, it may be helpful to review the meaning of some terms under the Act.

• Assignor: A tenant who transfers their lease to someone else, e.g. when selling a business.
• Assignee: A prospective tenant who takes over an existing lease from an existing tenant, e.g. when buying a business.
• Lessor or Landlord: The owner of the leased premises.

Assignor Disclosure Obligations

When the lease assignment is in connection with the sale of a retail business by the assignor to the assignee, the assignor must give the assignee an assignor disclosure statement as well as a copy of the current lease at least 7 days before the earlier of:

• The day on which the assignee enters into the business sale contract; or
• The day the lessor is asked to consent to the assignment.

Please be aware that this is a recent change to the legislation. Previously the requirement was to provide the assignor disclosure statement 7 days before the lessor was asked to consent to the assignment.

It is now possible for the assignee to waive the 7 day period with a waiver notice, provided they have already been given a copy of the assignor disclosure statement and a copy of the current lease

The assignor must also give the lessor a copy of the assignor disclosure statement given to the assignee on the day the lessor is asked to consent to the assignment. The lessor must respond to the request for the assignment of the lease within one month and failure to do so will result in the assignor having the right to bring a retail tenancy dispute before the Queensland Civil and Administrative Tribunal (QCAT).

Assignee Disclosure Obligations

The prospective assignee must give an assignee disclosure statement to the assignor before the lessor is asked to consent to the assignment.

The prospective assignee must also give an assignee disclosure statement to the lessor before the assignment is entered into.

For the purposes of the Act, an assignment is deemed to be entered into on the earlier of:

• The date by which the deed of assignment is signed by landlord, tenant and assignee.
• The date the assignee, with the consent of the landlord, takes possession of the premises

Lessor Disclosure Obligations

The lessor must give the prospective assignee a lessor disclosure statement as well as a copy of the lease at least 7 days before an assignment of a retail shop lease is entered into.

It is possible for the assignee to waive this requirement for a 7 day with a waiver notice and a legal advice report, provided they are given a copy of the lessor disclosure statement and a copy of the lease.

Failure by any party to provide a required disclosure statement

If a disclosing party fails to comply with the disclosure requirements then a retail tenancy dispute will exist between the parties. Unlike a situation of failure to provide a disclosure statement upon the commencement of a new lease, here there is no automatic right to terminate the assignment.

If it is within 2 months after the assignment is entered into, the party that should have received the disclosure statement can apply to QCAT for an order that the document is provided.

Should you wish to discuss in more detail how your business may be affected, please do not hesitate to contact our office and speak to one of our commercial lawyers .

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This toolkit brings together everything you need to know about self assessing duty on the transfer of a lease.

A lease is an interest in land, therefore any transfer of lease will be dutiable as a transfer of land. If you are a registered self assessor and are dealing with a transfer of lease, you must self assess it in  QRO Online .

Calculating transfer duty on a transfer of lease is done the same way as any other land interest transfer—the rate of duty  will apply to the higher of the consideration (including GST, if applicable) paid for the transfer or the lease’s unencumbered value.

An exemption may apply in certain cases.

Assessing a transfer of lease

A transfer of lease is usually pursuant to a  business contract , so you can stamp it as you would any other pursuant transfer. Find out about  endorsing transactions as a self assessor .

If the transfer is not pursuant to a business contract, you will need to treat it as the primary document for the transaction and assess it in QRO Online.

Here are some tips to help you self assess this type of transaction 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.

• Select  Transfer of non-residential land  as the  Transaction class . You cannot claim a home, first home or first home vacant land concession on non-residential land transactions. If the property is part non-residential and part residential (and a concession is being claimed), you must use the transaction class  Transfer of residential land .
• Agreement to transfer dutiable property —for transactions evidenced by an agreement
• Transfer of dutiable property —for transactions evidenced by a transfer only.
• Select  Land in Queensland  as the  Type of dutiable property .
• Evidence of value is generally not required for transfers of leases where there is nominal consideration.

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 .

Section 146 exemption

Section 146 of the  Duties Act 2001  provides an exemption for the acquisition of a new right that is the lease of a dwelling (e.g. in a retirement village) or a site agreement.

Exemptions under section 146 cannot be self assessed. If you believe this exemption applies to a transaction, you must lodge the documents, including a cover letter and  dutiable transaction statement (Form D2.2) , with Queensland Revenue Office for assessment.

Find out more about  lodging documents for assessment .

Also consider…

• Read the  data entry standards for QRO Online .
• Read the  public ruling on dutiable transactions subject to GST (DA011.1) .
• Use the  transfer duty calculator  to work out a transfer duty liability.
• Learn about  self assessing a surrender of lease .
• Get  help with QRO Online .
• View the list of  approved transactions for self assessors .

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I have A Queensland Retail Shop Lease – What are my Legal Protections?

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The Retail Shop Leases Act (“the Act”) sets mandatory minimum standards for retail shop leases in Queensland and offers tenants more protection than standard commercial leases.

Refer to our recent article “ How Do I Know if the Retail Shop Leases Act Applies to My Shop? ” which discusses what leases the Act applies to.

The protections under the Act can’t be contracted out of in the lease (and if there is any inconsistency between the terms of the lease and the Act, the terms of the Act will prevail) and are designed to give the tenant detailed disclosure before it enters into a lease and provide it with additional protections in relation to a number of key leasing issues.

Below is a brief summary of a number of these protective provisions for the tenant.

The Act requires the landlord to provide the tenant with various disclosures in relation to different lease situations (unless the lease is a periodic tenancy or a tenancy at will) so that it can consider this additional information before it commits to the lease. A tenant should of course also obtain legal advice in relation to the terms of the lease before committing to it.

For example, the landlord must provide the tenant with:

• for a new retail shop lease – a draft of the lease and a disclosure statement at least 7 days before the tenant enters into the lease; and
• for any renewal of the lease due to the exercise of an option – a current disclosure statement within 7 days of it receiving the tenant’s notice exercising the option.

If the landlord does not provide this disclosure (or gives a defective disclosure statement), the tenant can terminate the lease within the first 6 months after entering into it (and the landlord has to pay the tenant reasonable compensation for any loss or damage it suffered because of the non-compliance).

The Act also allows the tenant to give the landlord written notice, within 14 days of it receiving the renewal disclosure referred to above, that the exercise of the option is withdrawn (even if the renewed lease period has commenced).

The Act also provides that any proposed assignee of a retail shop lease:

• must be provided with a copy of the current lease and a disclosure statement by the current tenant at least 7 days before the landlord is asked to consent to the assignment of the lease (or, if the assignment is associated with the purchase of the business operated from the premises, the date the assignee enters into the business purchase contract); and
• must be provided with a disclosure statement and  copy of the lease by the landlord at least 7 days before the lease is assigned.

If either of the landlord or the assignor doesn’t provide this disclosure, the assignee can apply to the Tribunal for an order requiring that it be provided to you.

Special disclosure obligations also apply if the tenant is licencing the premises from a franchisor (who is the tenant under a retail shop lease).

We also note in passing that the Act also places an obligation on the tenant and assignee to provide certain disclosure and financial and legal advice reports to the landlord and assignor.

Although standard commercial leases allow the landlord and tenant to commercially negotiate what outgoings the tenant must pay, the Act places a number of restrictions on what outgoings are payable and obligations on the landlord in relation to its recovery of outgoings.

Under the Act:

• The landlord can only recover outgoings that are:
• its reasonable expenses directly attributable to the operation, maintenance and repair of the centre; and
• charges, levies, premiums, rates or taxes payable by the landlord because it owns the centre,

and it specifically provides that outgoings can’t include a number of items – including land tax.

(2)       A tenant is not required to pay any outgoings unless the lease specifies the outgoings that are payable, how they will be determined and apportioned to the tenant and how they may be recovered from the tenant.

(3)       The percentage of outgoings payable by the tenant can not be more than the proportion that their leased area bears to the total of all leased or occupied (or available for lease or occupancy) areas owned by the landlord in the centre.

(4)       The Landlord must provide the tenant with an annual:

• estimate (in the approved form and meeting the obligations of the Act) of the outgoings and the proportion of them that the tenant will be liable for; and
• audited statement of outgoings prepared by a registered auditor (in the approved form and meeting the obligations of the Act) within 3 months of the end of each period.

If the landlord does not provide these, the tenant can withhold payments for apportionable outgoings until they are given.

• Restrictions on Tenant’s Obligations to Make Payments

The Act also restricts the other costs that can be passed on to the tenant – including legal fees (which are usually payable by the tenant in a standard commercial lease).

The Act specifically provides that a tenant under a retail shop lease is not liable to pay any amount for the landlord’s costs in:

• preparing, renewing or extending the lease;
• obtaining its mortgagee’s consent to the lease; or
• complying with the Act.

Further, a retail shop lease can not require the tenant to make any payments other than:

• rent (noting that  up to one month’s rent in advance is allowable);
• outgoings (if  specified in the lease);
• damages for any breach of lease (if  specified in the lease);
• an indemnity to the landlord for any loss or damage it suffers as a result of any actions or omissions by the tenant;
• interest on arrears of rent and outgoings (so long as the rate and calculation method is detailed in the lease);
• the landlord’s reasonable legal or other expenses incurred in responding to any request by the tenant to vary the lease or for its consent for a sublease or licence;
• half of the costs of any valuer retained to determine market rent;
• the landlord’s costs in investigating any proposed assignee, obtaining its consent and the reasonable costs of the assignment;
• a repayable bond;
• mounts spent by the landlord for fitting out the leased premises;
• Payments to a sinking fund;
• Payments for promotion and advertising of the retail shopping centre; and
• surveyors and registration fees to register the lease.

The Act also prohibits the landlord from seeking or accepting payment of any key money or any amount for the goodwill of the tenant’s business operated on the premises (noting a penalty applies if it does).

Under relatively new amendments to the Act, the proposed landlord can now however recover its reasonable legal and other expenses incurred in preparing a lease if:

• the tenant agreed on the terms of the proposed lease with the landlord;
• the tenant have the landlord a written notice to prepare a final lease (and it is prepared);
• the tenant didn’t sign the lease; and
• the landlord provides the tenant with a copy of its invoice for the costs incurred in preparing the lease.
• Rent Reviews

Again, rent review is a commercial matter negotiated between the parties in a standard commercial lease and leases often provide that the rent is to be calculated on the better of two basis (e.g. the higher of CPI and 4%) and can’t decrease in any year (e.g. the rent remains the same if a market review would result in a decrease).

The Act however provides that a retail shop lease:

• can’t allow for rent review more than once every year (except for in the first year of the lease);
• can only allow for each review to be made on 1 basis (although different basis can be used during the term) – noting that the Act lists the allowable bases (which includes, among other things, fixed, CPI and market review); and
• must not include any ratchet provisions.

The Act also provides that if the current market rent can not be agreed by the parties, an independent specialist retail valuer must be appointed, at the equal cost of the parties, to determine it. The Act contains a number of provisions in relation to how the market rent is to be calculated and timeframes in that regard. Any clause of the lease that requires the determination to be made other than in accordance with the Act is void (to the extent that it does so).

• Options to Renew

The Act also contains a number of protections (in addition to the disclosure discussed above) in relation to the exercise of any option.

Given the implications to the tenant’s business of losing its premises, the Act provides that at least two months (but not more than 6 months) before the date the tenant must exercise its option, the landlord must give the tenant written notice of the option date.

The Act also provides that if the lease does not contain any provision for an option, the landlord must give the tenant written notice (at least six months before, but no more than a year before, the end of the term – noting however that a shorter period applies for leases with a term of less than a year):

• offering the tenant a renewal or extension of the lease (and detailing the terms of the offer) – this offer can’t be revoked for one month after it is made or if the tenant accepts it; or
• advising it that it does not intend to offer it a renewal or extension.

If the landlord does not give this notice and the tenant gives notice before the expiry of the term asking for an extension, the term of the lease is extended until six months after the landlord gives the notice (although the tenant may terminate the lease before this extended term ends on one month’s written notice).

If the rent for the renewed term is to be reviewed to market, the tenant can give the landlord notice (during the period commencing 6 months before the expiry of the current term and ending 3 months before its expiry – noting this period is different for leases under 1 year) requiring the market rent to be determined.  The Act also provides that despite any other provision of the lease, the last day which the tenant can exercise the option is 21 days after it receives written notice of the current market rent.

• Compensation

Under the Act the landlord has to pay the tenant reasonable compensation for any loss it suffers because the landlord (unless it is due to an emergency or required by law):

• substantially restricts the tenant’s access to the premises;
• takes action that substantially restricts or alters access by customers or the flow of potential customers past the premises;
• causes significant disruption to the tenant’s trading from the premises (or doesn’t take reasonable steps to stop any disruption within its control);
• doesn’t rectify, as soon as is practicable, any breakdown of plant or equipment that the landlord is responsible to maintain or any defect (that wasn’t reasonably apparent when the tenant entered into the lease) in the centre/building that the premises are located it;
• doesn’t undertake any cleaning, maintenance or repainting the centre/building that the premises is located in that the landlord is responsible for under the lease; or
• causes the tenant to vacate the premises before the end of the term because of any refurbishment or demolition of the centre/building where the premises are located.

The landlord must also pay reasonable compensation for any damage the tenant suffers because:

• it entered into the lease (including any renewal and assignment) based on any false or misleading statement or misrepresentation made by the landlord; or
• the premises was not available for trading by the date stated in the disclosure statement due to default by the landlord.

These provisions however do not apply to periodic tenancies or tenancies at will (unless they arise from holding over provisions).

• Relocation and Demolition

If a lease allows the landlord to relocate the tenant’s business or terminate the lease due to demolition of the premises, the landlord must adhere to the procedures and compensation provisions under the Act.

If the landlord wishes to relocate the tenant’s business it must give the tenant written notice:

• giving sufficient details of the proposed refurbishment, redevelopment or extension to indicate a genuine proposal that is to be carried out within a reasonably practicable time after the relocation and is not practically possible without vacant possession of the premises;
• that details a reasonably comparable alternative premises (in the centre if the current premises is located in a retail shopping centre) that will be made available to the tenant; and
• detailing the date the tenant must vacate – which has to be at least three months after the notice is given.

A tenant can terminate the lease within one month of receiving the notice if it does not wish to relocate (noting that if it doesn’t terminate in this time, it is taken to have accepted the offer contained in the landlord’s notice).

Any new lease of the relocated premises will be the same as the original lease except that:

• the term of the new lease will be the same as the remaining term of the original lease; and
• the rent for the new lease will be adjusted to take into account the difference in the commercial values of the premises (if necessary).

If the landlord relocates the tenant, it must pay the tenant’s reasonable costs of relocation including (but not limited to):

• the costs of dismantling and reinstalling fixtures and fittings and modifying or replacing fixtures and fittings to the standard immediately before the relocation; and
• its legal costs.

If the landlord wishes to terminate the lease under any demolition provision it must give the tenant written notice:

• giving sufficient details of the proposed demolition to indicate a genuine proposal to demolish the building within a reasonably practicable time after the lease is terminated; and
• detailing the date the lease terminates – which has to be at least six months after the notice is given.

The tenant can terminate the lease before the termination date by giving the landlord at least one months written notice.

If the landlord gives a demolition notice it must pay the tenant reasonable compensation for the loss and damage the tenant suffers:

• because of the early termination of the lease, if the demolition is not carried out, or is not carried out within a reasonable time after the termination (unless the landlord can prove that at the date the termination notice was given it did have a genuine proposal to demolish within a reasonably practicable time); and
• for the fitout of the premises (to the extent it was not carried out by the landlord), whether or not the demolition is actually carried out.
• Release of Guarantee

In standard commercial leases, as a condition to consenting to any assignment of the lease, the landlord will often insist that the outgoing tenant (assignor), and their guarantors, remain liable if the new tenant (assignee) defaults under the lease after the assignment.

The Act however protects the assignor and its guarantors in this regard and provides that so long as the assignor has complied with all of its disclosure obligations under the Act (and the disclosure is not defective), it, and its guarantors, are released from any liability under the lease resulting from a default by the assignee once the assignment is entered into.

• Dispute Resolution

The Act also includes a low cost, streamlined dispute resolution process – providing firstly for non-compulsory mediation and if the matter is not resolved at the mediation, referring the dispute to the Queensland Civil and Administrative Tribunal for determination.

Refer to our article “ Resolving a Retail Shop Leasing Dispute in Queensland ” for more detailed information in relation to this process.

Note also that any provision under a lease requiring a dispute to be referred to arbitration or to be heard by a court or tribunal does not limit the party’s rights under the above provisions.

• Miscellaneous Provisions

The Act also places a number of restrictions and obligations on the landlord in relation to:

• calculation of turnover rent (and confidentiality of information provided for that calculation);
• collection and use of sinking fund fees and promotion and advertising levies;
• unconscionable conduct;
• the tenant’s right to join or form commercial associations;
• retail trading hours; and
• refurbishment and refitting.

The above is by no means an exhaustive summary of the provisions, protections and obligations under the Act. It is important that landlords understand their obligations under the Act and tenants understand the protections that are provided to them and we invite you to contact our office if you have any queries in relation to, or are experiencing any difficulties with, your retail shop lease.

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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].

Bobby Nader

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