Reading time: 3 minutes

The actions of a landlord can cause a new implied lease to be created, despite no one signing a lease. This was the case in a recent Supreme Court of New South Wales case, Yangdo Pty Ltd v Equiti Group Pty Ltd [2017] NSWSC 277. This article explains when the landlord’s actions can imply a new lease.

The Case

The landlord (Yangdo) entered into three sublease agreements for the property between 2007 and 2008 with the sub-tenant, Equiti. The landlord’s real estate agent informed Equiti of a new sublease proposal in a letter, later signed on 23 April 2009.

The letter contained clauses relating to:

  • the term of the lease;
  • outgoings; and
  • a rent-free period.

In 2012, Equiti wanted to terminate two of the sublease agreements. The landlord argued that the letter was not binding. However, the letter indicated that the terms of a new lease were agreed on and signed. Furthermore, the current lease was due to expire on 1 May 2009, which showed an intention to enter into a new contract. The landlord also changed the rent to match the terms of the letter.

The Supreme Court held that the letter and the subsequent actions of the landlord indicated that there was a clear intent to enter into a new lease. This created an implied lease with the terms specified in the letter.

Practical Example of When an Implied Lease May Be Found

If a landlord and tenant are entering negotiations for a new lease, they should consider that their actions may imply an intention to enter a new lease. This implication can be stronger if:

  • there is an existing lease; or
  • the landlord allows the tenant to move into the premises while negotiations are still ongoing.

For example, say a pizza shop owner occupies leased premises under a lease about to expire. The pizza shop owner desperately wants to stay on in the premises because business is great. Accordingly, the pizza shop owner and landlord enter into negotiations about entering a new lease.

After coming to a written agreement, the landlord tells the pizza shop owner that the agreement will be binding when the parties execute the formal lease document but lets the tenant stay in the premises. However, later on, the landlord then makes changes to the lease document and will not sign the final lease.

In this situation, because the landlord and tenant came to a written agreement, and the landlord allowed the tenant to stay in the premises, this could indicate there was an implied lease with the terms contained in the written agreement.

Key Takeaways

In some cases, the actions of the landlord and tenant can imply the creation of a new lease, especially if there is written documentation to that effect. To determine this, you will need to examine all correspondence to determine each party’s intentions. However, as a court must determine the existence of an implied lease, it is always best to have a lawyer review the situation to provide advice.

If you need further advice on whether your discussions have created an implied lease, call LegalVision’s leasing lawyers on 1300 544 755 or fill out the form on this page.

Webinars

Everything You Need to Know about SaaS Agreements

Thursday 7 April | 11:00 - 11:45am

Online
Understand which contracts will protect your SaaS contract from risk, and how. Register for free today.
Register Now

What to Consider When Buying a Tech or Online Business

Wednesday 13 April | 11:00 - 11:45am

Online
Learn how to get the best deal when buying a tech or online business. Register for our free webinar today.
Register Now

Corporate Governance 101: Responsibilities for New Directors

Wednesday 27 April | 11:00 - 11:45am

Online
If you are a new company director, join our free webinar to understand your legal compliance obligations. Register today.
Register Now

Rogue Directors and Business Divorces: How to Remove a Director

Thursday 28 April | 11:00 - 11:45am

Online
Removing a board director is not simple. Join our free webinar to learn how to handle rogue directors. Register today.
Register Now

Employment Essentials for Tech Businesses

Thursday 5 May | 11:00 - 11:45am

Online
Protect your tech business and your employees by understanding your employment legal obligations. Register for our free webinar today.
Register Now

How to Protect and Enforce Your Trade Mark

Wednesday 11 May | 11:00 - 11:45am

Online
Protect your business’ brand from copycats and competitors. Register for this free webinar to learn how.
Register Now

How Franchisors Can Avoid Misleading and Deceptive Conduct

Wednesday 18 May | 11:00 - 11:45am

Online
Ensure your franchise is not accused of misleading and deceptive conduct. Register for our free webinar today.
Register Now

New Kid on the Blockchain: Understanding the Proposed Laws for Crypto, NFT and Blockchain Projects

Wednesday 25 May | 10:00 - 10:45am

Online
If you operate in the crypto space, ensure you understand the Federal Government’s proposed licensing and regulation changes. Register today for our free webinar.
Register Now

How to Expand Your Business Into a Franchise

Thursday 26 May | 11:00 - 11:45am

Online
Drive rapid growth in your business by turning it into a franchise. To learn how, join our free webinar. Register today.
Register Now

Startup Financing: Venture Debt 101

Thursday 23 June | 11:00 - 11:45am

Online
Learn how venture debt can help take your startup to the next level. Register for our free webinar today.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer