30 Sep Can I Prevent my Landlord from Assigning my Lease?
by Kristy Collins,Senior Associate
Can I Prevent my Landlord from Assigning my Lease?
It is generally a commercially accepted term of any Lease that the Tenant must first obtain the Landlord’s consent if the Tenant intends to assign the Lease to a third party. It is, however, extremely rare for the reverse of that position to be included as a Landlord does not wish to be restricted when it seeks to deal with its interest in the real property.
Tenants should seek legal advice with respect to the enforceability of the Lease they are entering into should the Landlord elect to sell the Premises during the term of the Lease and, further, the enforceability of any side agreements (i.e. incentive deeds), again, should the Landlord sell the Premises.
In Queensland, tenants under commercial leases, whether that be under the Retail Shop Leases Act or otherwise, do have the ability to register their Lease as a way of ensuring that the terms and conditions of that document are honoured by any new Landlord. However, not all tenants are interested in this initial outlay and it may be that they need to seek to have provisions within the Lease placing a positive obligation on the Landlord to ensure that if the Landlord does seek to sell the Premises, the Landlord must ensure that the incoming party enters into a deed that acknowledges that they will accept the terms and conditions of the Lease as it stands.
With respect to incentive deeds, the Tenant does not have the same ability to request provisions to be included in the Lease as such side agreements are generally confidential in nature and not referred to in the Lease. In this regard, landlords generally have an obligation in their negotiations with respect to the sale of the Premises to disclose all existing agreements they have with tenants and any incoming purchasers should do extensive due diligence to match up the rental return of the Premises with the terms of the Lease and query with the Landlord any discrepancies in relation to same. Such due diligence should then make the incoming purchaser aware of any side agreements that may be in place and, therefore, effectively accept those on purchase of the Premises.
Tenants should seek to turn their mind to these sorts of matters at the commencement of the Lease, despite the fact that they may or may never occur during the term of the Lease or otherwise.
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