Registration of Commercial Leases in Queensland
After all the negotiations are finalised and your new commercial lease has been signed by all relevant parties, a question still remains: should you now register the lease with your relevant state authority? The answer to this question lies in consideration of the benefits to both the landlord and tenant in registering the lease.
Is the registration of a lease a legal requirement?
In Queensland, it is not a requirement to register a lease per se. However, a lease for a duration of more than three years is considered a long term lease and as such, must be registered in order for the lessee to receive a legal and indefeasible interest in the leased premises and certain statutory protections. Conversely, a lessee who enters into a short term lease or a lease for a duration of three years or less, is automatically granted a legal and indefeasible interest in the premises by virtue of the Land Title Act 1994 (Qld) which makes registration unnecessary in these circumstances.
The benefits of registering a long term lease
As highlighted above, a long term lease must be registered in order for the lessee to receive a legal and indefeasible interest in the leased premises. The benefit of indefeasible title means that the tenant’s interest will be protected in instances where the property is sold or legally affected in any other way. For example, should a leased premises come under contract, any potential buyer will be required to purchase the property subject to a lease which is registered on title to the property. Further, in instances where a mortgagee takes possession of a property, that mortgagee will only be obligated to honour the terms of the lease and recognise the interests of the tenant pursuant to the terms of the mortgage if such lease is registered on title.
Practically speaking, landlords may also benefit from the registration of any leases on their property. Registering a lease on the title may serve to add value to the property, as generally, any potential purchasers will look favourably on buying commercial property which is already tenanted. Further, registration of a lease may look favourable to a landlord’s financier. Should a Landlord request to increase their facility limit, a registered lease on title could potentially provide the financier with an added layer of security, knowing that the landlord has the benefit of receiving rental payments in accordance with the lease up until its expiry.
Process for registration a lease
The registration of leases in Queensland is controlled by the Department of Natural Resources , Mines and Energy and, at the time of publication, incurs a lodgement fee of between $181 and $215. Most Leases will require the tenant to pay this fee in addition to costs associated with preparing the lease and obtaining a mortgagee’s consent (if required).
Should there be a mortgage on title, the consent of the mortgagee should be obtained before registering any lease to ensure the mortgagee is bound by the terms of the lease in the event that they take possession of the property. This is called a ‘mortgagee’s consent’. The consent is a Department of Natural Resources, Mines and Energy document which is signed by the mortgagee consenting to the registration of the lease on title to the property.
The drafting and registration of leases can often be a complex and time consuming process. At DSS Law, our solicitors have extensive experience in property and leasing matters. Should you require any advice with respect to your commercial lease, please do not hesitate to call our office and book an appointment to resolve any queries you may have.
DSS Law insight articles are intended to provide commentary and general information. They should not be relied upon as formal legal advice. If you would like specific advice relating to this topic, please contact DSS Law on 1300 DSS LAW or email@example.com.