When it comes to commercial or retail leases, whether you are a lessor or a lessee, it may be in your interests to register the lease with your State’s relevant Authority. In Queensland this is the Department of Natural Resources and Mines (DNRM Titles Registration).
Lease registration is handled differently in each State jurisdiction and is regulated by different sets of State legislation. In Queensland, the Property Law Act 1974 defines registration as “the making or recording by proper authority in the appropriate register … as may be requisite for recording a dealing or other transaction with respect to land.” The Retail Shop Leases Act 1994 (the Act) sets the mandatory minimum standards for a retail lease in Queensland.
Generally speaking, lease registration is not mandatory, and some states have automatic protection of land title for short-term leases. To figure out whether or not you should be registering your lease, it might be helpful to understand the basics of leases and how registration can protect your proprietary interests. Speak with a leasing lawyer to gain a better legal understanding of how leases operate in your state.
What does a lease do?
The grant of a lease creates what is called a ‘leasehold estate’, which gives a temporary right to hold land and effectively the tenant gains ownership of the property for the duration of the lease. A landlord holds title for a piece of land but when he or she leases it to a tenant or lessee, the title or proprietary interest is transferred to them.
A lease must be in writing to create a leasehold estate that is binding at law, known as the lease agreement. The lease agreement will set out the duration of the lease, including options to renew, which determines whether you have to register the lease or not. Again, a leasing lawyer will be able to explain this in more detail.
Must a lease be registered in order to be effective and enforceable?
Registration provides the lessee or tenant with indefeasible title. Indefeasible title or indefeasibility means that once a land title appears on the register, it cannot be defeated by other proprietary claims contrary to the register. Put another way, if your retail lease is registered, your title on the property is recorded by the state and ensures that your interest (lease) is protected in the event of sale or transfer of the property.
The registration process is designed to protect both landlords and tenants by creating an official record of the lease. If the leased premises are sold, the tenant would be afforded protection under a registered lease.
Is registration compulsory?
If the term of the lease is more than 3 years, the Property Law Act 1974 requires that the lease be registered. Any interest in land (such as a lease) only becomes effective upon registration of that interest on the title for the relevant parcel of land. In saying that, s71 of the Land Title Act 1994 (Qld) states “an unregistered lease for a lot or part of a lot is not invalid merely because it is unregistered” so there is some protection afforded to unregistered leases. However, the fact remains that, if the term of the lease exceeds 3 years and is not registered, the lease does not achieve indefeasibility and can be defeated by subsequent registered interests.
Short-term leases, such as those lasting three years or less or those entered into on a year-to-year basis, are not required to be registered on the title for the land LTA s185(1)(b). Automatic indefeasibility exists for short-term leases.
How can I register a commercial or retail lease?
When registering, the following details are required under the Land Title Regulation 2005 Act s3(2):
– lot number
– title and reference
– interest being leased
– description of premises being leased
– term of lease
– rental and/or consideration
A landlord can require the tenant to contribute to the expenses associated with the registration of a lease, including survey fees. For information on the various fees to which a landlord can require contribution, speak with a leasing lawyer in your state.
If your lease exceeds a period of 3 years, registration is the safest method of protecting your interests as a tenant.
The Department of Natural Resources and Water (Titles Registration) is responsible for the registration of leases in Queensland. You can access more information at dnrm.qld.gov.au.
If you require any further information or assistance, speak with your landlord or consult a LegalVision leasing lawyer who will be happy to assist you.