Transferring property
Leasing property
Types of titles
Property taxes
Environmental matters
Remedies and disputes
Transactions involving the acquisition and disposal of commercial property proceed in stages:
- •introduction of the parties and the property;
- •negotiation;
- •the parties entering into a preliminary agreement such as a Heads of Agreement, a confidentiality agreement or exclusive dealing arrangement;
- •the purchaser undertaking pre-contract due diligence;
- •the parties entering into a formal contract;
- •the purchaser undertaking post-contract due diligence; and
- •completion — the passing of ownership, payment.
Prior to entering binding contracts, parties may enter into preliminary agreements such as a Heads of Agreement, which sets out the key terms of a transaction. One of the main purposes of a preliminary agreement is to protect confidentiality because due diligence involves the disclosure of commercially sensitive documents by the vendor to the purchaser. It also signifies the parties entering into a negotiating relationship. Another such purpose is so that the purchaser can secure an exclusive right to negotiate the purchase while pursuing due diligence.
See Heads of Agreement.
Due diligenceDue diligence is the process whereby the purchaser carries out an investigation to:
- •determine if it is acquiring what it thinks it is acquiring;
- •evaluate the benefits and risks;
- •flag issues to be dealt with prior to entering into a binding contract; and
- •test the representations made by or on behalf of the vendor.
If due diligence is not undertaken, the purchaser must rely on the vendor's warranties in the contract (if any) and must typically commence proceedings to enforce its rights under the warranties if they are breached. Even if the purchaser is successful, the recovery of damages will depend on the financial standing of the vendor or may be limited as a matter of law (see eg Bain v Fothergill (1874) LR7HL 158; [1874-80] All ER Rep 83 in the states where it still applies).
Whether or not the parties enter into a preliminary agreement or formal due diligence will depend largely on the nature of the property being acquired. For instance, where the purchaser is acquiring a single retail shop which is subject to a lease due diligence may be a matter of the purchaser's solicitor requesting information and documents from the vendor's solicitor prior to exchange. The vendor's response may be the subject of vendor warranties included in the contract or rights arising if there has been a breach of the statutory obligations of the vendor under the relevant state or territory legislation.
Where the property being acquired is, eg a multi-story office building, the parties may enter into a Heads of Agreement which will contain, amongst other things, obligations of confidentiality and the key terms agreed by the parties in principle and possibly an exclusive dealing arrangement.
If due diligence is undertaken it should be concluded with a report to the client prior to the expiry of the due diligence period as the purchaser will need time to absorb it and to respond. If no due diligence is undertaken, a comprehensive letter of advice should be prepared.
Due diligence requires a team approach and usually involves at least two of the following disciplines:
- •legal;
- •financial;
- •structural;
- •contamination; and
- •technical.
An effective due diligence process requires:
- •the flow of information ideally coordinated by one representative from each side;
- •requests for information; and
- •control of the flow and management of information and documents.
See Due diligence.
Contract methodsThe primary structures to acquire commercial property are:
- •a contract with reciprocal obligations and rights to buy and sell;
- •a call option;
- •a call and put option;
- •acquisition of the property itself; and
- •acquisition of shares in the company, or otherwise taking control of an entity which owns the property, such as a unit trust.
A call option is granted by the vendor to the purchaser. A call option gives the purchaser an option but not an obligation to purchase the underlying property at an agreed written price at a specified time in the future.
While the grant of a call option is not dutiable, the following events will give rise to a stamp duty liability assessed on the ad valorem rate of duty:
- •exercise of the call option;
- •an assignment of the grantee's rights in the call option; or
- •exercise of the option by the nominee.
As a put option is “given” by the prospective purchaser, that party is the grantor and the owner of the land is the grantee.
A put option gives the grantee a right to “put” the land to the grantor — the grantor is then required to buy the land. The consideration for the grant of the put option will be the put option fee and the period during which it can be exercised will be the put option period. Upon the exercise of the put option by the grantee, the grantor is required to buy, and the grantee is required to sell the land.
Put and call optionA put and call option is a combination of a call option and a put option in respect of the one parcel of land. It is usually contained in a deed (although can be an arrangement arising in separate documents) and comprises:
- •a call option granted by the owner of land entitling the prospective purchaser, on the valid exercise of the call option during the call option period, to require the owner to enter into a contract for the sale of the land with the prospective purchaser to sell the land; and
- •a put option entitling the owner, on the valid exercise of the put option during the put option period, to require the prospective purchaser to enter into a contract for the purchase of the land with the owner.
Usually, but not always, the call option period precedes the put option period. This enables the owner of the land to require the purchase of the property if the grantee has not exercised the call option.
Incidentally, the put option is not the acquisition of a new right and so a put option agreement is not a dutiable transaction. See Call and Put options above.
Contract for the sale of landCooling off periodsA put and call option is a combination of a call option and a put option in respect of the one parcel of land. It is usually contained in a deed (although can be an arrangement arising in separate documents) and comprises:
Unit Sale Agreement/Share sale agreementThis is a set number of days after your client makes a purchase in which they can cancel the transaction. On cancellation, they may have to pay the seller a fee but it is generally not a significant amount. However, in some jurisdictions where statutory cooling-off periods apply in a contract for the sale of land, there is no cooling-off period if the property was sold at auction or the underlying property is not residential. See Cooling off period above.
See Contract methods.
Exchange, settlement and in betweenBetween settlement and exchange:
- •minimise the potential for delays in exchange and settlement by ensuring all documents are not in order at exchange or settlement;
- •check contracts are correctly executed so that their validity is not challenged;
- •lodge a caveat, priority notice or settlement notice immediately after exchange of contracts (whether it be arising from exercise of an option arising under a deed of call option, deed of call and put option, or a contract for sale of land) to protect the purchaser's interests — unless prohibited by the contract from doing so; and
- •in those states where protection by priority notice or settlement notice is unavailable, carry out final searches as close as possible to settlement, and not, say in the morning of a settlement scheduled to take place in the afternoon
The importance of the lodgment of a caveat, priority notice or settlement notice and the timing of the final search was highlighted in the High Court case of Black v Garnock (2007) 230 CLR 438; 237 ALR 1; BC200705972. In this case:
- •A Writ for Levy of Property (issued the day prior to settlement) was lodged with the Registrar-General after the final search was carried out but prior to settlement scheduled to take place that day.
- •Settlement was effected in the afternoon without the purchaser being aware that a writ had been registered on the title.
The right to occupy premises can be granted by a lease or a licence. The main test that distinguishes a lease from a licence is that a lease confers on the occupier exclusive possession. There is usually no exclusive possession under a licence.
Licences are often coupled with a lease, ie a licence for storage, car parking or outdoor seating area.
There are different types of licences and leases. It is important that the different types of licences and leases be distinguished as they impact upon transactional aspects and the rights of the parties.
South Australia
Please note that the definition of “retail shop lease” in the Retail and Commercial Leases Act 1995 (SA) includes both leases and licences.
See Licences and leases.
Australian Capital Territory
As all land in the ACT is leasehold any lease granted by the registered proprietor of land is therefore a sublease.
Note that the definition of “lease” for the purposes of the Leases (Commercial and Retail) Act 2001 (ACT) includes licences. See s 12 Leases (Commercial and Retail) Act 2001 (ACT).
All leases must comply with the following requirements in order to confer a valid leasehold estate:
- •be in writing (save in the case of leases for less than 3 years duration in Victoria);
- •have certainty of duration;
- •comply with the statutory requirements as to the form of writing and registration; and
- •subdivision requirements where the lease of land constitutes a subdivision.
Victoria
Leases for less than 3 years may be created without writing: s 54 of the Property Law Act 1958 (Vic).
A subdivision is defined as “...the division of land into two or more parts which can be disposed of separately” and there are no statutory subdivision requirements, as part of the formal requirements of leases: s 3(1) of the Subdivision Act 1988 (Vic).
Western Australia
See Formal requirements of leases.
South Australia
In general, leases must be in writing: s 29 of the Law of Property Act 1936 (SA). However, oral leases and licences may create rights under the Retail and Commercial Leases Act 1995 (SA), see definition of “retail shop lease” in s 3.
Development approval is required for a lease or licence for a term of more than 6 years (including extensions) of a part allotment of land on which there is no building that is suitable and is used for human occupation. What authority?
An informal agreement to lease, which often precedes a formal lease agreement, is a species of a heads of agreement. It is important that it be clear whether the parties are bound and if so, when ensuring that they are not bound prematurely.
| Case example: |
| Parties to a transaction should make clear to each other when it is that a document is intended to legally bind them. |
| This was emphasised in the decision of the NSW Supreme Court in Realm Resources Ltd v Aurora Place Investments Pty Ltd [2019] NSWSC 379. |
| Party A signed and returned a sublease to Party B but, several days later, Party A asked t Party B to hold off signing the sublease (and to hold the sublease which was already executed by Party A in escrow) pending further notice from Party A. |
| Party B ignored this request and also signed the sublease and sent a copy of the now-counter signed sublease back to Party A. |
| The New South Wales Supreme Court held that Party A became legally bound by the sublease after it signed and delivered the document as a deed to Party B. |
| The court held that both parties intended that the sublease take effect as a deed and, as the formal requirements for a deed were satisfied when the executed document was delivered by Party A to Party B, Party A became immediately bound and Party A could not then recall the deed. The attempt by Party A to have the sublease held in escrow was too late; by that time Party A was already bound by the sublease, notwithstanding that Party B had yet to countersign the sublease. |
| If parties do not intend to be legally bound until an agreed form of documentation has been executed and delivered, then this intention needs to be clearly expressed in correspondence between the parties. |
The parties may also enter into a formal agreement to lease, ie an agreement to grant a lease in the future without vesting title to the leasehold estate to the prospective tenant, eg when the landlord is in the process of purchasing the property or is acquiring an interest as head lessor.
Key lease terms include:
- •option to renew;
- •rent review;
- •requirement to obtain the landlord's consent;
- •obligation to repair, maintain and replace;
- •redecoration;
- •obligations of the landlord; and
- •obligations of the tenant.
A lease must be properly executed to ensure that it is fully binding on all parties.
New South Wales
Covenants in a lease are implied under Pt 6 of the Conveyancing Act 1919 (NSW). These covenants maybe excluded or amended. There are also short forms of covenants in the Conveyancing Act, which, pursuant to s 86 of the Conveyancing Act 1919 (NSW) can be adopted. As well standard forms of lease are available to purchase.
Victoria
There are generally no implied covenants in Victoria, however in the case of leases of registered land, there are some very basic covenants implied under s 67 of the Transfer of Land Act 1958 (Vic). In the case of residential tenancies in Victoria, the Residential Tenancies Regulations 1998 (Vic) contain prescribed forms for residential lettings. All other leases and tenancies in Victoria are not affected by these provisions.
Queensland
Western Australia
Covenants in a lease are implied under the Transfer of Land Act 1893 (WA), which may be negatived, varied or extended by express provisions in the lease: s 131 of the Transfer of Land Act 1893 (WA). There are also short forms of covenants in the Transfer of Land Act 1893 (WA), which can be adopted pursuant to s 94 of this Act and a dozen of these are listed in the Twelfth Schedule to the Transfer of Land Act 1893 (WA).
South Australia
Covenants in registered leases are implied under ss 124 and 125 of the Real Property Act 1886 (SA) and may be excluded or amended. There are also eleven short forms of covenants in Sch 16 of the Real Property Act which can be adopted.
There is no stamp duty payable on leases in South Australia, NSW, Vic, WA and ACT.
See Drafting and reviewing leases.
Australian Capital Territory
Sections 119 and 120 of the Land Titles Act 1925 (ACT) implies specified covenants on behalf of lessees and grants powers to lessors. These implied covenants and powers may be excluded or amended.
For leases of 30 years or more entered into prior to 29 April 2014, stamp duty is payable at conveyance rates.
Since 29 April 2014 stamp duty has been charged on commercial leases where a premium is paid by the lessee for the lease. A premium is considered to be any consideration (whether monetary or non-monetary) that is paid, or agreed to be paid, for the lease. If a premium is paid for the grant or transfer of a commercial lease and the premium exceeds the determined threshold of 25% above market rent over the term of the lease, duty is payable on the total premium component and will be payable at the conveyance rate applicable when the lease was entered into. See s 6A Duties Act 1999 (ACT).
Lease incentives which may be granted by landlords include rent free periods of occupancy, fit-out contributions by the landlord and removal costs.
There may be tax implications of lease incentives on both the landlord and tenant.
See Lease incentives.
Assignment of leasesAn assignment of a lease is the transfer of the ownership of the lease from the existing tenant to the proposed tenant. An assignment of a lease differs from a sublease in that under an assignment, all of the existing tenant's rights in the lease for the balance of the term are transferred. Under a sublease, the existing tenant (head tenant/sub-landlord) retains the right of reversion of the lease at the expiration of the sublease which must be a date prior to the expiration of the lease. An assignment for less than the balance of the term of the lease operates as a sublease.
The enforcement of lease covenants between the original parties to a lease and the successors and assigns of both the original tenant and the original landlord has given rise to a complex body of judicial decisions.
New South Wales
The entitlement to assign a lease is incident to every lease subject to exceptions. Where there is a condition that the tenant may not assign the lease without the landlord's consent, the covenant is normally subject to a proviso that the landlord's consent cannot be unreasonably withheld.
Part 5 of the Retail Leases Act 1994 (NSW) (RLA) limits the grounds on which the landlord can refuse consent and sets out the procedure to apply for consent.
Victoria
The landlord may not unreasonably withhold consent allowing the tenant to assign the lease or stipulate for payment of a premium to allow assignment “unless the lease contains an express provision to the contrary”: s 144(1) of the Property Law Act 1958 (Vic).
The Retail Leases Act 2003 (Vic) excludes the operation of s 144 of the Property Law Act 1958 (Vic) in relation to assignments but provides a framework, which regulates when consent of the landlord is needed and when it may be lawfully withheld.
Western Australia
The landlord may not unreasonably withhold consent allowing the tenant to assign the lease “…unless the lease contains an express provision to the contrary…”: s 80 of the Property Law Act 1969 (WA). Section 10 of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) limits the landlord’s right to refuse consent to circumstances where there are “reasonable grounds”.
South Australia
The entitlement to assign a lease is incident to every lease subject to exceptions. Where there is a condition that the tenant may not assign the lease without the landlord's consent, the covenant is often subject to a proviso that the landlord's consent cannot be unreasonably withheld.
Part 7 of the Retail and Commercial Leases Act 1995 (SA) (RCLA) limits the grounds on which the landlord can refuse consent and sets out the procedure to apply for consent.
See Assignment of leases.
Australian Capital Territory
In respect of retail and commercial leases, lessors cannot refuse consent to an assignment where the lessee has complied with the provisions of Pt 11 of the Leases (Commercial and Retail) Act 2001 (ACT) and satisfied the lessor of the financial standing and skills of any proposed assignee and, where relevant, guarantor together with the proposed use of the premises following the assignment.
An option to renew confers a right to call for a further lease. Options may either be call or put options. The majority of options in commercial leases are call options.
A call option will commonly contain preconditions regarding:
- •the time and manner of exercise of the option; and
- •the effect of a breach of the lease covenants by the tenant.
The failure to strictly comply with any of the preconditions is fatal, rendering the purported exercise invalid with the consequence that the landlord is not required to grant the tenant the further term.
Special provisions apply to retail shop leases under the relevant legislation of each state and territory.
New South Wales
Under s 32 of the Retail Leases Act 1994 (NSW) (RLA), tenants with a lease containing a market rent review in the first year of the further term, are entitled to request a determination of the current market rent prior to the last day on which it is required to exercise the option, and the time to exercise the option is extended. This gives the tenant certainty as to the rent before it exercises the option (and is thereby bound to enter into the option term).
Section 133E of the Conveyancing Act provides that breaches of certain obligations and lease covenants may not preclude an option to renew except in certain specified circumstances. The section provides statutory relief to those tenants who would otherwise be refused an option to renew because they are unable to satisfy the precondition of the option which requires that they comply with the lease covenants.
Victoria
Section 27(2) of the Retail Leases Act 2003 (Vic) limits quite narrowly the circumstances in which the landlord may refuse to allow the tenant to exercise an option.
Western Australia
Section 83C of the Property Law Act 1969 (WA) gives statutory relief to a tenant, where the tenant has breached an obligation under the lease, which would otherwise preclude the tenant from exercising an option under the lease.
South Australia
Section 20B of the Retail and Commercial Leases Act 1995 (SA) (RCLA) requires that, in general, the term of a retail shop lease, including rights of renewal, must be at least 5 years. Under s 20J of the RCLA, the landlord is required to give the tenant notice at least 6 months from the end of the term of the landlord’s intentions regarding renewal of the lease. Division 3 of Pt 4A of the RCLA gives tenants under shopping centre leases preferential rights of renewal.
See Options to renew.
VariationsNew South Wales
A lease that is registered under the Real Property Act 1900 (NSW) (RPA) may be varied to:
- •increase or reduce the rent;
- •increase or reduce the term of the lease; or
- •vary, omit or add a provision of the lease: s 55A(1) RPA.
Variations as to the premises leased may not be varied under the RPA. The addition of a landlord or tenant cannot be effected by a variation.
Victoria
Only leases with at least 10 years unexpired may be registered under the Transfer of Land Act 1958 (Vic): s 11(1). Section 67A of that Act allows variations of registered leases to be made by the registered proprietor with the consent of the lessor but provides that such permitted variations do not include:
- •a transfer or assignment of a lease; and
- •an alteration of:
- ◦the term of a lease;
- ◦an area of leased land; or
- ◦the parties to a lease.
Western Australia
The Landgate Land Titles Registration Policy and Procedure Guides provides that:
A sub-lease may include variations to the lease, however any variations included cannot alter the lease area or the term of the lease. The lessor must be a party to any variations of the lease.
A variation of lease cannot alter the leased area, the term of the lease or the parties to the lease.
Where the area of the leased premises is to be varied, a surrender of lease form should be used where the leased premises are being decreased, and a new lease granting the additional area of land is to be prepared where the leased premises are being increased.
Where the term of a lease is to be increased, an extension of lease form should be used. Where the parties to the lease are to be varied, a transfer of lease form should be used.
A variation document of a freehold lease cannot be accepted for registration. Please note however, that variations to a freehold lease can be included in an extension of lease, sub-lease or transfer of lease document.
Australian Capital Territory
A person who acquires an interest in land takes free of any sublease that has a term exceeding 3 years unless that sublease has been registered on the title to the property. See s 58(1)(d) Land Titles Act 1925 (ACT).
A variation of a sublease does not bind any third party unless the variation has been registered. The current form of variation of sublease is Land Titles Form 022-VSL.
South Australia
It is not possible to register a variation of the terms of a lease that is registered under the Real Property Act 1886 (SA) (RPA) unless an extension of lease is registered in accordance with s 153 of the RPA. Such an extension can include provisions which:
- •increase or reduce the rent;
- •increase or reduce the term of the lease; or
- •vary, omit or add a provision of the lease.
It is common for an extension of lease to extend the term of a lease for one day in order to provide a means of registering such variations.
Variations as to the premises leased or the addition of a landlord or tenant cannot be effected by an extension of lease.
See Variations.
Concurrent leasesA concurrent lease is a lease of the landlord's rights and obligations under an existing lease. This type of lease arises where the landlord grants a second lease over the same property, which is “concurrent” with the term of the existing lease. The result is that the second lessee (eg under the concurrent lease) effectively becomes the lessor of the first lessee under the original lease. Concurrent leases are very flexible and may be useful in the following circumstances:
- •it enables a landlord to divest itself of the management of a property or of a particular lease;
- •taxation advantages; and
- •as a potential vehicle to resolve disputes between the landlord/vendor and the tenants during the sale of a commercial building, which is subject to existing tenancies, and the landlord/vendor is not prepared to deal with issues arising from the leases.
See Concurrent leases.
Mortgage over leasesThe grant by a tenant of a mortgage over the lease occurs when a tenant obtains a loan and the mortgage over the lease forms the security of the lender over the tenant's assets or business.
On default by the tenant, the mortgagee may enter into possession of the premises and conduct the tenant's business and dispose of the business and of the lease. The obligation of the mortgagee to the landlord depends on whether the mortgagee is in possession and may be limited by the relevant legislation.
Victoria
If the tenant of a registered lease becomes bankrupt and the tenant’s trustee disclaims the lease, the mortgagee may apply to the registrar to record the disclaimer, which then operates as a foreclosure and transfer to the mortgagee of the interest of the bankrupt in the lease: s 68(1), Transfer of Land Act 1958 (Vic).
The main ways in which leases can be brought to an end are:
- •effluxion of time, if the lease is for a fixed term;
- •notice to quit, if the lease is periodic (eg month by month);
- •acceptance of repudiation of the breach of an essential term;
- •forfeiture, if the lease so provides;
- •disclaimer in case of personal bankruptcy or corporate insolvency;
- •merger;
- •statutory grounds;
- •break clauses; and
- •surrender.
Claims for unconscionable conduct or misleading and deceptive conduct must be brought under the Competition and Consumer Act 2010 (Cth).
New South Wales
Part 7A of the RLA also contains unconscionability provisions. However, these only apply to retail leases and do not apply to non-retail commercial leases.
Victoria
Part 9 of the Retail Leases Act 2003 (Vic) contains unconscionability provisions. However, these only apply to retail leases and do not apply to non-retail commercial leases.
South Australia
By virtue of the Fair Trading Act 1987 (SA), the Australian Consumer Law established under the Competition and Consumer Act 2010 (Cth) is applied as part of state law.
Australian Capital Territory
Part 5 of the Leases (Commercial and Retail) Act 2001 (ACT) contains provisions relating to unconscionable or harsh and oppressive conduct. These provisions apply to specified commercial and retail leases.
Western Australia
Part IIA of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) contains unconscionability and misleading or deceptive conduct provisions. However, these only apply to retail leases and do not apply to non-retail commercial leases.
New South Wales
In New South Wales, the four principal systems of holding land are:
- • old system title (general law title);
- • Torrens title;
- • Crown land; and
- • native title.
All estates and interests in land are either held by the Crown or by a person who has derived title, either directly or indirectly, from the Crown. An estate in fee simple is derived from the grant by or purchase from the Crown.
Victoria
In Victoria, the four principal systems of holding land are:
- • old system title (general law title);
- • Torrens title;
- • Crown land; and
- • native title.
All estates and interests in land are either held by the Crown or by a person who has derived title, either directly or indirectly, from the Crown. An estate in fee simple is derived from the grant by or purchase from the Crown.
Queensland
In Queensland, the three systems of holding land are:
- • Torrens title;
- • Crown land; and
- • native title.
All estates and interests in land are either held by the Crown or by a person who has derived title, either directly or indirectly, from the Crown. An estate in fee simple is derived from the grant by or purchase from the Crown.
Western Australia
In Western Australia, the four principal systems of holding land are:
- • old system title (general law title);
- • Torrens title;
- • Crown land; and
- • native title.
All estates and interests in land are either held by the Crown or by a person who has derived title, either directly or indirectly, from the Crown. An estate in fee simple is derived from the grant by or purchase from the Crown.
South Australia
In South Australia, the four principal systems of holding land are:
- • old system title (general law title);
- • Torrens title;
- • Crown land; and
- • native title.
All estates and interests in land are either held by the Crown or by a person who has derived title, either directly or indirectly, from the Crown. An estate in fee simple is derived from the grant by or purchase from the Crown.
Tasmania
In Tasmania, the four principal systems of holding land are:
- • old system title (general law title);
- • Torrens title;
- • Crown land; and
- • native title.
Native title is not a significant part of practice.
All estates and interests in land are either held by the Crown or by a person who has derived title, either directly or indirectly, from the Crown. An estate in fee simple is derived from the grant by or purchase from the Crown.
Northern Territory
In Northern Territory, the principal systems of holding land are:
- • Torrens title;
- • Crown land;
- • native title; and
- • Aboriginal land.
All estates and interests in land are either held by the Crown or by a person who has derived title, either directly or indirectly, from the Crown. An estate in fee simple is derived from the grant by or purchase from the Crown.
Australian Capital Territory
In the Australian Capital Territory, the principal systems of holding land are:
- • Torrens title; and
- • Crown land
All land in the ACT is owned by the Commonwealth and is subject to a leasehold system of land tenure. The ACT Government, by agreement with the Commonwealth, provides a facility for the registration of land within the Jervis Bay Territory. Land in the Jervis Bay Territory is held under both leasehold and freehold title.
New South Wales
All Crown grants since 1 January 1863 have been registered under the Real Property Act 1900 (NSW) (RP Act) and are known as land under the “Torrens” system. Land subject to Crown grants made prior to 1 January 1863 (which have not been bought under the provisions of the RP Act) is known as land held under “old system” or “common law” title.
Title under the "old system" can only be established by tracing it back to a good root of title — that is, an unbroken chain of all events and documents affecting the land for 30 years. It can be an extremely difficult process.
Victoria
All Crown grants since 1 January 1863 have been registered under Transfer of Land Act 1958 (Vic) and are known as land under the "Torrens" system. Land subject to Crown grants made prior to 1 January 1863 (which have not been bought under the provisions of the Act) is known as land held under "old system" or "common law" title.
Title under the "old system" can only be established by tracing it back to a good root of title - that is, an unbroken chain of all events and documents affecting the land for 30 years. It can be an extremely difficult process.
Queensland
In Queensland, the “old system” started under the Registration of Deeds Act 1843 (Qld). Land subject to Crown grants were bought under the Real Property Act 1861 (Qld), which are not under the Land Title Act 1994 (Qld).
Western Australia
The “old system” applies to land that was granted prior to the Transfer of Land Act 1874 (WA) (repealed). All land under the Transfer of Land Act 1874 (WA) is deemed to be under the operation of the Transfer of Land Act 1893 (WA): s 4(2).
The Torrens system is based on a system of registration whereby a register for all titles is maintained at Landgate (the Western Australian Land Information Authority).
South Australia
All Land Grants from the Crown since the commencement of the Real Property Act 1857-8 (SA) have been registered under what is now the Real Property Act 1886 (SA) and are known as land under the “Torrens” system. Land subject to Crown grants made prior to then (which have not subsequently been brought under the provisions of the Real Property Act) is known as land held under “old system” or “common law” title. The Real Property (Registration of Titles) Act 1945 (SA) requires the Registrar-General to convert all land from the “old system” to the Real Property Act by a compulsory process, however this will take some time and in many cases, the Real Property Act titles created will be limited titles.
Title under the “old system” can only be established by tracing it back to a good root of title — that is, an unbroken chain of all events and documents affecting the land for 30 years. It can be an extremely difficult process.
Tasmania
Nearly all titles are held under the land title system based on a register of government certificates of ownership, known as the Torrens system. The English system of land tenure brought to Australia with European settlement is known as "old system", "general law" or "common law". Land subject to Crown grants made prior to the Torrens system was held under old system. A longstanding conversion program means, there are few remaining old system titles yet to be bought under the provisions of the Torrens system.
This is Title under the "old system" can only be established by tracing it back to a good root of title — that is, an unbroken chain of all events and documents affecting the land for at least 20 years. It can be an extremely difficult process.
Northern Territory
There is no "old system" title in the NT.
See Old system title.
Title under the old system can not only be held under a documentary title, but also possessory title. This is because title includes the right to possession so that the person who has the best right to possession is able to resist claims for possession, even by a legal owner under general law. This allows a person to become the owner of the land under possessory title through adverse possession.
Qualified title and limited title are hybrid forms of title, bearing some of the features of the Torrens system and the infirmities of the old system. They are created in the process of converting old system land to the Torrens system. Land held under qualified title is subject to subsisting interests. For land which is limited title, there is doubt as to its boundaries. See Possessory title, qualified title and limited title.
South Australia
Title under the old system can not only be held under a documentary title, but also possessory title. This is because title includes the right to possession so that the person who has the best right to possession is able to resist claims for possession, even by a legal owner under general law. This allows a person to become the owner of the land under possessory title through adverse possession.
Limited titles are hybrid forms of title, bearing some of the features of the Torrens system and the infirmities of the old system. They are created in the process of converting old system land to the Torrens system. Land held under limited title is subject to subsisting interests or there is doubt as to its boundaries.
New South Wales
The Torrens system of registration of title came into effect on 1 January 1863 under the Real Property Act 1862 (NSW). That Act has since been replaced by the Real Property Act 1900 (NSW).
Title under the Torrens system is derived through registration of interests in land. Less than 5% of the land holding in New South Wales is under old system title, not just under private holdings, but includes holdings of considerable value, both urban and rural.
Victoria
The Torrens system of registration of title came into effect on 1 January 1863 under the Transfer of Land Act 1862 (Vic). That Act has since been replaced by the Transfer of Land Act 1958 (Vic).
Title under the Torrens system is derived through registration of interests in land. Less than 3% of the land holding in Victoria is under old system title.
Queensland
The Torrens system of registration of title came into effect on 1 January 1863 under the Real Property Act 1861 (Qld). That Act has since been replaced by the Land Title Act 1994 (Qld). Title under the Torrens system is derived through registration of interests in land. Less than 5% of the land holding in Queensland is under old system title, not just under private holdings, but includes holdings of considerable value, both urban and rural.
Western Australia
The Torrens system of registration came into effect under the Transfer of Land Act 1874 (WA). That act has since been repealed and replaced by the Transfer of Land Act 1893 (WA).
South Australia
The Torrens system of registration of title first came into effect on the commencement of the Real Property Act 1857 (SA). That Act has since been replaced by the RP Act.
Title under the Torrens system is derived through registration of interests in land. A very small amount of the land holding in South Australia remains under old system title, not just under private holdings, but includes holdings of considerable value, both urban and rural.
Tasmania
The Torrens system of registration of title first came into effect on the commencement of the Real Property Act 1862 (Tas). That current Act is the Land Titles Act 1980 (Tas).
Title under the Torrens system is derived through government certified registration of interests in land. A very small amount of the land holding in Tasmania remains under old system title.
Northern Territory
The Torrens system of registration of title came into effect under the Real Property Act 1886 (NT). That Act has since been replaced by the Land Title Act (NT).
Title under the Torrens system is derived through registration of interests in land.
Australian Capital Territory
The Torrens system of registration of title came into effect in NSW on 1 January 1863 under the Real Property Act 1862 (NSW) which had application in the ACT. On 21 May 1925, the application of this Act in the ACT was repealed and replaced with the Real Property Ordinance 1925 (Cth). On 11 May 1989, the ordinance then became the Real Property Act 1925 (ACT) by virtue of s 34(4) of the Australian Capital Territory (Self-Government) Act 1988 and was renamed the Land Titles Act 1925 (ACT) in 1995.
Title under the Torrens system is derived through registration of interests in land.
See Torrens title.
While strata title, strata (leasehold) title and community title are often referred to as types of title and in fact have the word “title” included in the name, they are systems of subdivision providing methods by which property can be sold or conveyed.
Queensland
In Queensland, such types of title are called community title schemes (see below).
This guidance note will discuss each of the above methods of subdivision from the perspective of the developer.
South Australia
While strata title, strata (leasehold) title and community title are often referred to as types of title and in fact have the word “title” included in the name, they are systems of land division providing methods by which property can be sold or conveyed.
See Strata title.
Community title is a method of subdividing land, combining traditional subdivision with concepts from strata subdivision, including common property, a controlling body corporate, rules of the scheme and provision of services to all lots in the scheme.
South Australia
Community title is a method of dividing land, combining traditional subdivision with concepts from strata division, including common property, a controlling body corporate, rules of the scheme and provision of services to all lots in the scheme.
See Community title.
“Native Title” has been recognised as a separate species of land ownership, as determined by the laws and customs of particular Aboriginal people or Torres Strait Islanders, rather than being derived from original Crown grants.
Northern Territory
An additional and separate legislative scheme also operates in relation to traditional Aboriginal land in the Northern Territory, which provides for the grant of freehold land to various Aboriginal Land Trusts.
In the Northern Territory, over 40% of the land mass has been granted under the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) to benefit Aboriginals. Under this Act, there are restrictions on how interests in the land can be disposed of.
See Native title.
There are very few property transactions that do not have any tax implications. Therefore, property practitioners cannot afford to be ignorant of the possible tax implications on a property transaction.
This subtopic sets out the aspects of the taxation legislation which are relevant to commercial property transactions. Those taxes, a general description of the nature of the tax and the legislation governing those taxes, are set out below:
- •Stamp duty — taxed on dutiable transactions, whether or not there is a written instrument: Duties Act 1997 (NSW).
- •Land tax — charged on the value of all land holdings of a taxpayer: Land Tax Act 1956 (NSW); Land Tax Management Act 1956 (NSW).
- •Capital gains tax — charged on capital gains made on an asset acquired after 20 September 1985: Income Tax Assessment Act 1997 (Cth). There is a duty on purchasers to withhold capital gains tax on certain sales unless the vendor produces a clearance certificate.
- •Goods and services tax — levied on all transactions in which an entity makes a taxable supply: A New Tax System (Goods and Services Tax) Act 1999 (Cth). Since 1 July 2018, there is now an obligation on certain purchasers of new residential premises or potential residential land to withhold an amount in respect of the vendor’s obligation to pay goods and services tax (GST).
- •Landholder Duty — charged on the acquisition of a significant interest in a landholder (an entity which has land holdings with an unencumbered value of $2 million or more: Duties Act 1997 (NSW).
The website of the Office of State Revenue includes a calculator to calculate the different forms of stamp duty. Taxation issues can be both complex and prescriptive and involve both legal and accounting principles. It is therefore important that a practitioner's retainer clearly set out the scope of the taxation advice to be given. The advice may be limited to general advice only. In complex transactions, or where the client has a complex structure, it may be prudent for the practitioner to advise the client to seek specialist advice.
VictoriaThere are very few property transactions that do not have any tax implications. Therefore, property practitioners cannot afford to be ignorant of the possible tax implications on a property transaction.
This subtopic sets out the aspects of the taxation legislation which are relevant to commercial property transactions. Those taxes, a general description of the nature of the tax and the legislation governing those taxes, are set out below:
- •Stamp duty — taxed on dutiable transactions, whether or not there is a written instrument: Duties Act 2000 (Vic).
- •Land tax — charged on the value of all land holdings of a taxpayer: Land Tax Act 2005 (Vic). Since 1 January 2018, vacant residential land tax is an additional annual tax set at 1% of the capital improved value of the taxable land.
- •Capital gains tax — charged on capital gains made on an asset acquired after 20 September 1985: Income Tax Assessment Act 1997 (Cth). There is a duty on purchasers to withhold capital gains tax on certain sales unless the vendor produces a clearance certificate.
- •Goods and services tax — levied on all transactions in which an entity makes a taxable supply: A New Tax System (Goods and Services Tax) Act 1999 (Cth). Note that since 1 July 2018, there is an obligation on certain purchasers of new residential premises or potential residential land to withhold an amount in respect of the vendor’s obligation to pay GST.
- •Landholder Duty — charged on the acquisition of a significant interest in a landholder (an entity which has land holdings with an unencumbered value of $2 million or more: Duties Act 2000 (Vic).
The website of the Office of State Revenue includes a calculator to calculate the different forms of stamp duty.
Taxation issues can be both complex and prescriptive and involve both legal and accounting principles. It is therefore important that a practitioner's retainer clearly set out the scope of the taxation advice to be given. The advice may be limited to general advice only. In complex transactions, or where the client has a complex structure, it may be prudent for the practitioner to advise the client to seek specialist advice.
Queensland- •Stamp duty (also referred to as Transfer Duty)— taxed on dutiable transactions: Duties Act 2001(Qld).
- •Land tax — charged on the value of all land holdings of a taxpayer: Land Tax Act 2010 (Qld).
- •Capital gains tax — charged on capital gains made on an asset acquired after 20 September 1985: Income Tax Assessment Act 1997 (Cth). There is a duty on purchasers to withhold capital gains tax on certain sales unless the vendor produces a clearance certificate.
- •Goods and services tax — levied on all transactions in which an entity makes a taxable supply: A New Tax System (Goods and Services Tax) Act 1999 (Cth). Since 1 July 2018, there is an obligation on certain purchasers of new residential premises or potential residential land to withhold an amount in respect of the vendor’s obligation to pay GST.
- •Landholder duty — charged on the acquisition of a significant interest in a landholder (an entity which has land holdings with an unencumbered value of $2 million or more): Duties Act 2001 (Qld).
The website of the Office of State Revenue in Queensland includes a calculator to calculate the different forms of stamp/transfer duty. Taxation issues can be both complex and prescriptive and involve both legal and accounting principles. It is therefore important that a practitioner's retainer clearly set out the scope of the taxation advice to be given. The advice may be limited to general advice only. In complex transactions, or where the client has a complex structure, it may be prudent for the practitioner to advise the client to seek specialist advice.
Western AustraliaThere are very few property transactions that do not have any tax implications. Therefore, property practitioners cannot afford to be ignorant of the possible tax implications on a property transaction.
This sub topic sets out the aspects of the taxation legislation which are relevant to commercial property transactions. Those taxes, a general description of the nature of the tax and the legislation governing those taxes, are set out below:
- •Western Australia — Duty — taxed on dutiable transactions, whether or not there is a written instrument: Duties Act 2008 (WA).
- •Land tax — charged on the value of all land holdings of a taxpayer: Land Tax Act 2002 (WA), Land Tax Assessment Act 2002 (WA) and the Taxation Administration Act 2003 (WA).
- •Capital gains tax — charged on capital gains made on an asset acquired after 20 September 1985: Income Tax Assessment Act 1997 (Cth). There is a duty on purchasers to withhold capital gains tax on certain sales unless the vendor produces a clearance certificate.
- •Goods and services tax — levied on all transactions in which an entity makes a taxable supply: A New Tax System (Goods and Services Tax) Act 1999 (Cth). Since 1 July 2018, there is an obligation on certain purchasers of new residential premises or potential residential land to withhold an amount in respect of the vendor’s obligation to pay GST.
- •Landholder duty — charged on the acquisition of a significant interest in a landholder (an entity which has land holdings with an unencumbered value of $2 million or more): Duties Act 2008 (WA).
The website of the Office of State Revenue includes a calculator to calculate the different forms of duty.
Taxation issues can be both complex and prescriptive and involve both legal and accounting principles. It is therefore important that a practitioner's retainer clearly set out the scope of the taxation advice to be given. The advice may be limited to general advice only. In complex transactions, or where the client has a complex structure, it may be prudent for the practitioner to advise the client to seek specialist advice.
South AustraliaThere are very few property transactions that do not have any tax implications. Therefore, property practitioners cannot afford to be ignorant of the possible tax implications on a property transaction.
This topic sets out the aspects of the taxation legislation which are relevant to commercial property transactions. Those taxes, a general description of the nature of the tax and the legislation governing those taxes, are set out below:
| Tax | General Description | Legislation |
| South Australia — Stamp duty | Imposed on dutiable transactions, whether or not there is a written instrument. | Stamp Duties Act 1923 (SA) |
| Land tax | Charged on the value of all land holdings of a taxpayer | Land Tax Act 1936 (SA) |
| Capital gains tax | Charged on capital gains made on an asset acquired after 20 September 1985. There is a duty on purchasers to withhold capital gains tax on certain sales unless the vendor produces a clearance certificate. | Income Tax Assessment Act 1997 (Cth) |
| Landholder Duty | Levied where control of an entity changes and the entity holds land assets in excess of $1,000,000; 90% or more of the shares or units in a listed entity change ownership | Stamp Duties Act 1923 (Cth) |
| Goods and services tax | Levied on all transactions in which an entity makes a taxable supply. Since 1 July 2018, there is an obligation on certain purchasers of new residential premises or potential residential land to withhold an amount in respect of the vendor’s obligation to pay GST. | A New Tax System (Goods and Services Tax) Act 1999 (Cth) |
The website of the Revenue SA includes a calculator to calculate the different forms of stamp duty.
Taxation issues can be both complex and prescriptive and involve both legal and accounting principles. It is therefore important that a practitioner’s retainer clearly sets out the scope of the taxation advice to be given. The advice may be limited to general advice only. In complex transactions, or where the client has a complex structure, it may be prudent for the practitioner to advise the client to seek specialist advice.
TasmaniaThere are very few property transactions that do not have any tax implications. Therefore, property practitioners cannot afford to be ignorant of the possible tax implications on a property transaction.
This topic sets out the aspects of the taxation legislation which are relevant to commercial property transactions. Those taxes, a general description of the nature of the tax and the legislation governing those taxes, are set out below:
| Tax | General Description | Legislation |
| Tasmania — Stamp duty | Imposed on dutiable transactions, whether or not there is a written instrument. | Duties Act 2001 (Tas) |
| Land tax | Charged on the value of all land holdings of a taxpayer | Land Tax Act 2000 (Tas) |
| Capital gains tax | Charged on capital gains made on an asset acquired after 20 September, 1985. There is a duty on purchasers to withhold capital gains tax on certain sales unless the vendor produces a clearance certificate. | Income Tax Assessment Act 1997 (Cth) |
| Land rich duty | Levied on corporations holding land in Tasmania valued in excess of $500,000 and the land is more than 60% of the unencumbered value of its property | Duties Act 2001(Tas) |
| Goods and services tax | Levied on all transactions in which an entity makes a taxable supply. Since 1 July 2018, there is an obligation on certain purchasers of new residential premises or potential residential land to withhold an amount in respect of the vendor’s obligation to pay GST. | A New Tax System (Goods and Services Tax) Act 1999 (Cth) |
The website of the State Revenue Office of Tasmania has a comprehensive set of rulings, guidelines and fact sheets, and includes a calculator to calculate the different forms of stamp duty.
Taxation issues can be both complex and prescriptive and involve both legal and accounting principles. It is therefore important that a practitioner's retainer clearly sets out the scope of the taxation advice to be given. The advice may be limited to general advice only. In complex transactions, or where the client has a complex structure, it may be prudent for the practitioner to advise the client to seek specialist advice.
Northern TerritoryThere are very few property transactions that do not have any tax implications. Therefore, property practitioners cannot afford to be ignorant of the possible tax implications on a property transaction. This subtopic sets out the aspects of the taxation legislation, which are relevant to commercial property transactions. Those taxes, a general description of the nature of the tax and the legislation governing those taxes, are set out below:
| Tax | General Description | Legislation |
| Northern Territory — Stamp duty | Taxed on dutiable transactions, whether or not there is a written instrument | Stamp Duty Act 1978 (NT) |
| Capital gains tax | Charged on capital gains made on an asset acquired after 20 September 1985. There is a duty on purchasers to withhold capital gains tax on certain sales unless the vendor produces a clearance certificate. | Income Tax Assessment Act 1997 (Cth) |
| Goods and services tax | Levied on all transactions in which an entity makes a taxable supply. Since 1 July 2018, there is an obligation on certain purchasers of new residential premises or potential residential land to withhold an amount in respect of the vendor’s obligation to pay GST. | A New Tax System (Goods and Services Tax) Act 1999 (Cth) |
| Landholder duty | Charged on the acquisition of a significant interest in a landholder (an entity which has land holdings with an unencumbered value of $500,000 or more) | Stamp Duty Act 1978 (NT) |
The website of the Territory Revenue Office includes a calculator to calculate the different forms of stamp duty.
Taxation issues can be both complex and prescriptive and involve both legal and accounting principles. It is therefore important that a practitioner’s retainer clearly sets out the scope of the taxation advice to be given. The advice may be limited to general advice only. In complex transactions, or where the client has a complex structure, it may be prudent for the practitioner to advise the client to seek specialist advice.
Australian Capital TerritoryThere are very few property transactions that do not have any tax implications. Therefore, property practitioners cannot afford to be ignorant of the possible tax implications on a property transaction.
This subtopic sets out the aspects of the taxation legislation which are relevant to commercial property transactions. Those taxes, a general description of the nature of the tax and the legislation governing those taxes, are set out below:
- •Stamp duty — taxed on dutiable transactions, whether or not there is a written instrument: Duties Act 1999 (ACT).
- •Land tax — charged on residential properties that are rented or owned by a trust or corporation: Land Tax Act 2004 (ACT).
- •Capital gains tax — charged on capital gains made on an asset acquired after 20 September 1985: Income Tax Assessment Act 1997 (Cth). There is a duty on purchasers to withhold capital gains tax on certain sales unless the vendor produces a clearance certificate.
- •Goods and services tax — levied on all transactions in which an entity makes a taxable supply: A New Tax System (Goods and Services Tax) Act 1999 (Cth). Since 1 July 2018, there is an obligation on certain purchasers of new residential premises or potential residential land to withhold an amount in respect of the vendor’s obligation to pay GST.
- •Landholder duty — charged on the acquisition of a significant interest in a landholder (landholder is simply defined as an entity which is a private company or a private unit trust scheme that has an interest in land in the ACT itself or through linked entities): Duties Act 1999 (ACT) and Taxation Administration Act 1999 (Cth).
The website of the ACT Revenue Office includes a calculator to calculate the different forms of stamp duty.
Taxation issues can be both complex and prescriptive and involve both legal and accounting principles. It is therefore important that a practitioner's retainer clearly set out the scope of the taxation advice to be given. The advice may be limited to general advice only. In complex transactions, or where the client has a complex structure, it may be prudent for the practitioner to advise the client to seek specialist advice.
Contaminated land is a major issue for developers and land owners because of the possible devaluation in the property and the potential that contamination could increase costs of development. The costs associated with contaminated land can be extraordinary and include the:
- •cost of the main clean up works;
- •investigation costs;
- •long term monitoring costs;
- •maintenance costs;
- •management costs (including reputation issues);
- •holding costs (eg until the cleanup has been completed) ;and
- •legal costs.
Equally as important, finance can be difficult to obtain for contaminated land and is usually offered on terms that the bank withholds the estimated costs of remediation. Contamination is regulated by the states and territories and compliance requires a jurisdiction by jurisdiction review.
What is contamination?Contamination can be caused by activity conducted on the land or on adjoining/nearby land. From a Commonwealth perspective, the Environment Protection and Biodiversity Conservation Act 1999 (Cth) applies throughout Australia, however Commonwealth legislation is more directed at issues with national impact or concerning nuclear issues.
The relevant state and territory legislation define contamination within the particular jurisdictions.
Management of contaminated landIn each Australian jurisdiction, there are particular departments and/or bodies that manage contaminated land through such measures as preparing and reviewing environment protection policies, issuing notices and enforcing penalties.
Liability for contaminationThe various state and territory legislation outline the procedure to identify the parties who are liable for contamination. In some jurisdictions, the legislation establishes a hierarchy of persons who may be liable for contamination. The legislation of some jurisdictions also allows for the transferring and apportioning of liability for contamination.
Conveyancing PracticeThe obligations of a vendor to disclose contamination issues both at common law and under statute are limited. From a purchaser's perspective, there is no public registry or public document, either separately or together, which comprehensively and definitively sets out the contamination status of a parcel of land. However, in some jurisdictions there are registers of contaminated land eg in New South Wales, the contaminated land register and, in Queensland, the Environmental Management Register and the Contaminated Land Register. In each jurisdiction, there are steps that parties can take to ensure the issue of contamination is dealt with in conveyancing transactions, so that the parties' contractual obligations can be made clear.
See the following Guidance Notes:
- •New South Wales — Contaminated land
- •Victoria — Contaminated land
- •Western Australia — Contaminated land
- •South Australia — Contaminated land
- •Tasmania — Contaminated land
- •Northern Territory — Contaminated land
- •Australian Capital Territory — Contaminated land
The Commercial Building Disclosure (CBD) program is a regulatory program established by the Building Energy Efficiency Disclosure Act 2010 (Cth) (the Act). It came into effect on 1 July 2011 and is managed by the Australian Government Department of the Environment and Energy. The Commercial Building Disclosure (CBD) program requires the mandatory disclosure of a building’s energy efficiency information to the market when commercial office space above a certain size is offered for sale or lease.
The program’s aim is to provide prospective purchasers and tenants of large commercial office space with access to energy efficiency information, which is both credible and meaningful.
Documentation and informationThe disclosure regime is contained in the following:
- •Building Energy Efficiency Disclosure Act 2010 (Cth);
- •Building Energy Efficiency Disclosure Regulations 2010 (Cth);
- •Building Energy Efficiency Disclosure Determination 2016; and
- •Building Energy Efficiency Disclosure (Disclosure Affected Buildings) Determination 2016.
The CBD Program requires most sellers and lessors of office space of 1000 sqm or more to obtain a Building Energy Efficiency Certificate (BEEC) before the building goes on the market for sale, lease or sublease.
BEECs are valid for up to 12 months and include:
- •the building's National Australian Built Environment Rating System (NABERS) energy for offices star rating; and
- •a tenancy lighting assessment of the relevant area of the building.
Standard energy efficiency guidance information previously included on the last six pages of the BEEC is now provided online. This includes information on how building owners and tenants might improve a building's energy efficiency and allow the CBD team to provide relevant and targeted energy efficiency information to building owners.
Only CBD accredited assessors can apply for BEECs on behalf of building owners or lessors. For more details about BEECs. See Get and use a rating.
The Act applies to an area or a building used or capable of being used as an office and of a kind determined by the Minister under a legislative instrument to be disclosure affected (currently 1000 sqm or more): s 3, Building Energy Efficiency Disclosure Act 2010 (Cth).
Notes
There are statutory exemptions.
Parties to which the Commercial Building Disclosure (CBD) appliesFrom 1 July 2017, CBD will apply to:
- •a building owner who is selling or leasing office space with a net lettable area of 1000 sqm or more;
- •a tenant who is subleasing part of your tenancy with a net lettable area of 1000 sqm or more;
- •a real estate agent who is advertising office space with a net lettable area of 1000 sqm or more; and
- •a CBD accredited assessor who must comply with the conditions of accreditation, conduct of assessments and use of information gathered from building owners and tenants.
The kinds of buildings and areas of buildings that are disclosure affected are identified in the Building Energy Efficiency Disclosure (Disclosure Affected Buildings) Determination 2016 (Cth).
The following kinds of buildings are exempt from the disclosure requirements:
- •new buildings where a certificate of occupancy (or equivalent) has either not yet been issued or was issued less than 2 years earlier;
- •buildings that have completed a major refurbishment for which a certificate of occupancy (or equivalent) was issued less than 2 years earlier. Note: for a major refurbishment where no certificate of occupancy was issued, you need to apply for an exemption;
- •strata-titled buildings; and
- •mixed use buildings where total office space comprises less than 75 % of the building by net lettable area (or gross lettable area if net lettable area is unavailable).
See Who is affected?
See Exceptions and Exemptions.
The disclosure requirementsAfter 1 July 2017, disclosure affected buildings or tenancies of 1000 sqm or more that are offered for sale or lease will require a Building Energy Efficiency Certificate (BEEC). BEECs are issued by the Department of the Environment and Energy before the building or tenancy is put to market.
The BEEC includes:
- •a National Australian Built Environment Rating System (NABERS) energy star rating for the building; and
- •a Tenancy Lighting Assessment for the relevant areas of the building.
BEECs are valid for up to 12 months and are publicly accessible on the online Building Energy Efficiency Register.
An accredited assessor will need to be engaged to undertake the assessments and lodge the application for a BEEC. The accredited assessor will ask for the previous year’s electricity and gas bills for the building.
See Find a CBD accredited assessor.
See How to get a BEEC.
NABERS is a performance-based rating system derived from actual occupation and operations in a building over a 12-month period. It has a rating scale from one to six, where six is the best possible energy efficiency rating. The NABERS Energy star rating must appear on all forms of advertising material for the building.
PenaltiesThe penalties for non-compliance under the Act are severe and include fines of up to $170,000 for each event of non-disclosure and $17,000 for each subsequent day of non-compliance. There is also a “name and shame” register published on a publicly accessible website.
What should be done?Entities (including those that are not corporations) which own Disclosure Affected Space, should act now to ensure that they can comply with the disclosure obligations. Further, it is important that leases, contracts for sale and mortgages contain provisions to enable the entity bound by the Act to comply with the disclosure obligations.
See Mandatory disclosure — Commercial building energy efficiency.
Remedies and disputes considers some of the issues arising out of transactions involving the transfer of commercial property and the remedies available to purchasers and vendors. Issues and remedies arising from leasing transactions are dealt with under the guidance note Termination of leases under the Leasing property sub-topic.
Main principles are covered so as to provide practitioners with sufficient guidance regarding the range, prerequisites, advantages and disadvantages of particular remedies, and the process of seeking the client's instructions and choosing the most appropriate and effective remedies in the particular circumstances. It is also necessary to consider the possibility of reaching a compromise by negotiation.
While commercial property transactions are different from typical contracts (eg, there is a standard form of contract and statutory disclosures and warranties) it is important for practitioners to remember that commercial property transactions are a species of contract. For this reason, some general principles have been set out in the first guidance note. See General principles.
The remedies discussed in this sub-topic include:
- • claims for compensation and other claims under the contract for sale of land;
- • termination (with a separate guidance note on Notices, which have the effect of making time under a contract essential, thereby entitling the innocent party to terminate for breach);
- • rescission;
- • damages;
- • orders for repayment of the deposit;
- • equitable remedies (with a separate guidance note on Specific performance, which is an equitable remedy); and
- • statutory remedies.
Below is a very broad and general summary of the types of breaches for which the above remedies are available. The summary does not attempt to cover the entire range of contractual principles or remedies as it is difficult to categorise particular types of breaches and indicate the remedy by the non-defaulting party because of the diverse nature of breaches, factual issues and the seriousness of the breach, the parties' perceptions of the validity of the transaction and the degree of certainty regarding the parties’ position.
New South WalesClaim for compensation under cl 7 of the 2005 edition of the Contract for Sale of LandThe table below provides a very broad and general summary of the types of breaches for which the above remedies are available. The summary does not attempt to cover the entire range of contractual principles or remedies as it is difficult to categorise particular types of breaches and indicate the remedy by the non-defaulting party because of the diverse nature of breaches, factual issues and the seriousness of the breach, the parties' perceptions of the validity of the transaction and the degree of certainty regarding the parties’ position.
The table below provides a very broad and general summary of the types of breaches for which the above remedies are available. The summary does not attempt to cover the entire range of contractual principles or remedies as it is difficult to categorise particular types of breaches and indicate the remedy by the non-defaulting party because of the diverse nature of breaches, factual issues and the seriousness of the breach, the parties' perceptions of the validity of the transaction and the degree of certainty regarding the parties’ position.
The table below provides a very broad and general summary of the types of breaches for which the remedies are available. The summary does not attempt to cover the entire range of contractual principles or remedies as it is difficult to categorise particular types of breaches and indicate the remedy by the non-defaulting party because of the diverse nature of breaches, factual issues and the seriousness of the breach, the parties' perceptions of the validity of the transaction and the degree of certainty regarding the parties' position.
| Remedy | Type of breach | |
| Claim for compensation under cll 4, 14 and 24 of the 2018 General Conditions Joint Form of General Conditions of the Sale of Land | • | delay in competition of settlement (cl 4); |
| • | error or misdescription (cl 15); and | |
| • | in the event of a default: cl 24. | |
| Termination | • | breach of an essential term; |
| • | breach of a condition; | |
| • | repudiation of the contract by the other party; | |
| • | breach innominate or intermediate term (depending on how seriously the innocent party is affected by breach); and | |
| • | failure to comply with the default notice (see cll 22, 23 and 24 of the 2018 General Conditions — Joint Form of General Conditions for the Sale of Land). | |
| Rescission | In certain circumstances as prescribed in ss 6, 10 and 18 of the Sale of Land Act 1970 (WA). | |
| Subject to any provisions included in a contract of sale by agreement, giving rise to a right to rescind. | ||
| Damages | • | breach of an innominate or intermediate term (depending on how seriously the innocent party is affected by the breach); |
| • | breach of the contract including warranties and non-essential or essential terms; and | |
| • | pursuant to cl 24 of the 2018 General Conditions — Joint Form of General Conditions of the Sale of Land. | |
| An order for the return of the deposit | See cl 1 of the 2018 General Conditions — Joint Form of General Conditions of the Sale of Land. | |
| Equitable remedies | ||
| Rectification | To rectify an instrument if there is a mistake. | |
| Specific performance | Performance of the contractual obligations have not taken place, usually the payment of the purchase price and the execution of the instrument vesting title. | |
| Relief against forfeiture (of the purchaser’s interest in the land) | May be granted notwithstanding the purchaser’s prior breach of an essential term of the contract, if it will not cause injustice but will prevent injustice. | |
| Injunction | To prevent wrongful dealing with or misuse of the property, pending completion or prevent the vendor from frustrating any relief, which the purchaser may claim. | |
| Remedy | Type of breach | |
| Declaration | Declares the rights of the parties so as to give certainty, as far as possible, as to the position of each of the purchaser and vendor. | |
| Statutory remedies | ||
| Competition and Consumer Act 2010 (Cth) | Misleading and deceptive conduct. | |
| Australian Consumer Law 2010 (Cth) | • | unfair contracts; and |
| • | unconscionable conduct. | |
| Corporations Act 2001 (Cth) | Winding up of the vendor. | |
| An order for the return of the deposit | See cl 1 of the 2018 General Conditions — Joint Form of General Conditions of the Sale of Land. | |
The table below provides a very broad and general summary of the types of breaches for which the remedies are available. The summary does not attempt to cover the entire range of contractual principles or remedies as it is difficult to categorise particular types of breaches and indicate the remedy by the non-defaulting party because of the diverse nature of breaches, factual issues and the seriousness of the breach, the parties' perceptions of the validity of the transaction and the degree of certainty regarding the parties’ position.
The table below provides a very broad and general summary of the types of breaches for which the remedies are available. The summary does not attempt to cover the entire range of contractual principles or remedies as it is difficult to categorise particular types of breaches and indicate the remedy by the non-defaulting party because of the diverse nature of breaches, factual issues and the seriousness of the breach, the parties' perceptions of the validity of the transaction and the degree of certainty regarding the parties’ position.
The table below provides a very broad and general summary of the types of breaches for which the remedies are available. The summary does not attempt to cover the entire range of contractual principles or remedies as it is difficult to categorise particular types of breaches and indicate the remedy by the non-defaulting party because of the diverse nature of breaches, factual issues and the seriousness of the breach, the parties' perceptions of the validity of the transaction and the degree of certainty regarding the parties’ position.
The table below provides a very broad and general summary of the types of breaches for which the remedies are available. The summary does not attempt to cover the entire range of contractual principles or remedies as it is difficult to categorise particular types of breaches and indicate the remedy by the non-defaulting party because of the diverse nature of breaches, factual issues and the seriousness of the breach, the parties' perceptions of the validity of the transaction and the degree of certainty regarding the parties’ position.
