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- Leasing property
Assignment of leases
An 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.
