Did you know that if your Lease is not registered or caveated a new owner of the premises may be able to evict you?

The importance of registering your lease or protecting the lease by lodgement of a caveat for commercial or retail leases has again been emphasised by a recent decision of Lighting by Design Pty Ltd -v- Cannington Nominees Pty Ltd. The case has highlighted the provisions of Section 68 of the Transfer of Land Act which provides that a lease for greater than 5 years or any option in the lease is not binding upon a purchaser of the property unless the lease is registered or caveated.

Since this decision has become public we have seen a number of instances where new purchasers have written to the existing tenant notifying them that their future options are not binding against the new owner, in these instances the lease was for a term of 5 years or less. If the lease is for more than 5 years then the new purchaser can write to the tenant and terminate the lease and either evict the tenant or place the tenant on a monthly lease upon new and usually more onerous terms and conditions.

The lodgement of a caveat, for which McDonald Pynt Lawyers charge $440.00 inclusive of registration fees and GST, will protect your interest under the lease and we strongly recommend that if you are currently in leased premises that you contact Stephanie Wright (stephaniew@mpcl.com.au) with regard to lodging a caveat to protect your lease.

If you are a landlord of a commercial or retail property and are considering selling the property, you need to be aware of the purchaser's intention. It is often stated in a contract for sale that the purchaser buys the property subject to the leases, however the provisions of Section 68 of the Transfer of Land Act override this and notwithstanding that provision the purchaser may still terminate the leases if the term is greater than 5 years or advise the tenant that it is not bound by any options in the lease if it is not registered or protected by a caveat. If the purchaser does terminate a lease this can result in the previous owner being liable to the tenant for a breach of contract for the failure to grant the tenant the entire term of the lease and options.

McDonald Pynt Lawyers can draft a clause for insertion in the contract for sale to overcome this problem so that the purchaser has a contractual obligation with you as the seller to honour the existing leases.

If you are considering selling tenanted properties and you wish to ensure there is no ongoing future liability to your current tenants, or you wish to ensure the tenant's future occupation of the leased premises, then contact David McDonald (david@mpcl.com.au) with regard to drafting the clause.