assignment of lease in nsw

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• Assignments of lease - what you should know as a t…

Assignments of lease ? What you should know as a tenant

You (or your company) are a tenant of commercial or retail premises.  You are thinking of assigning your lease. 

What are the main issues?

If you assign your lease, you transfer your rights under the lease to a new tenant.  You cannot assign part of your lease.  An assignment must deal with the whole of your premises.

A proposed assignment requires the consent of your landlord.  Normally, the landlord cannot unreasonably withhold consent to an assignment, provided that the proposed new tenant is of sound financial standing and is willing to provide personal guarantees and/or a bank guarantee at least equivalent to any guarantees that you may have provided to your landlord.

With an assignment, the landlord will normally require you and the new tenant to enter into a deed with the landlord under which the new tenant agrees to take over your obligations under the lease, and you acknowledge that despite the assignment, you are not released from obligations under the lease.

Normally, if you assign a lease, the new tenant takes over your obligations under the lease from the date of the assignment, but you are not released from your obligations under the lease unless you are able to persuade your landlord to release you.  Although releases are not normally provided, there is no reason why you should not request a release.

Although you remain liable after an assignment, landlords will normally release any personal guarantees or bank guarantees that may have been provided by you, provided that the new tenant offers equivalent replacement guarantees.

Transfer of shares instead of assignment

If your company is the tenant under your lease, there may be circumstances in which it suits you to sell the company rather than assign the lease.  Some leases contain provisions which require the landlord’s consent for a transfer of all or a majority of shares in the tenant company, as if the transfer was an assignment of the lease.  If your lease does not contain these provisions, the consent of the landlord will not be required.  However, if personal guarantees have been provided, the landlord’s consent will be required if it is intended to replace those guarantees.

Retail Lease Act

If your lease is of retail premises covered by the Retail Leases Act , that Act sets out the procedure to be followed in relation to assignments and limits the circumstances in which your landlord can withhold consent to an assignment.

Legal Expenses

With an assignment, the landlord will expect its legal expenses in connection with the assignment to be reimbursed.  You may be able to negotiate for the subtenant to pay all or some of the landlord’s legal expenses and your legal expenses.

Author: Jack Gordon

Contributing Author: Melissa Potter

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Commercial Leases in NSW: Common Questions & Answers

Commercial Leases in NSW: Common Questions & Answers

1. what is a commercial lease.

A commercial lease refers to the lease of commercial property. This includes office space, industrial units, workshops and warehouses, retail shops (whether they are within a shopping centre or not), storage sheds, working yards and other non-residential property.

2. How long can a commercial lease term be?

Generally there is no restriction on the term of a Lease, but it must be fixed with certainty.

3. Is stamp duty payable on the creation or assignment of a lease?

Since 1 January 2008, stamp duty has not been payable on a Commercial Lease executed on or after that date. However, it is still payable on the transfer or assignment of a Lease.

4. Must the landlord allow a tenant to renew a lease?

If the Lease contains an option to Lease for a further term, the landlord will be bound by that option.

5. Is the landlord allowed to charge any amount for rent?

Essentially “yes”. No restrictions apply to the amount of rent that can be charged for commercial and industrial premises. However, during the term of the Lease, rent can only be increased in accordance with the rent review provisions in the Lease. Retail leases, which are a special type of commercial lease, do have statutory restrictions imposed on the timing and method of increasing rent during the term of the lease.

6. Can a tenant assign the Lease, or sublease, without landlord’s consent?

Generally, unless the Lease specifically prevents assignment or sub-leasing, the tenant has that right and doesn’t require the Landlord’s consent. However, most Commercial Leases will contain a term requiring the Landlord’s consent to be obtained before the Lease can be assigned or sub-let, or prohibiting it entirely.

7. What is a Security Deposit?

A security deposit is typically an amount equivalent to one or two month’s rent, which is deposited by the tenant to secure, as far as money can, the tenant’s performance of the tenant’s obligations under the Lease. Under the Retail Leases Act 1994 (NSW) a Landlord is required to lodge a security deposit with the Director-General of the Department of State and Regional Development. However, under your normal Commercial Lease, a Landlord generally is at liberty to deal with the Security Deposit as they see fit, so long as it is repaid, in part or in full, if required under the Lease.

Related Article: Why should I require security if I’m a landlord and leasing my commercial or retail premises?

8. Are there any formal requirements for the execution of a lease?

For land under the provisions of the Real Property Act 1900 (NSW) (which is most land in NSW) a Lease for a term in excess of three (3) years must be effected by executing a Lease in the approved form and the Lease must be registered, in order to pass to the Tenant an enforceable leasehold estate. If such a Lease is not registered, the Tenant would only have an equitable interest and it would be unenforceable against a competing registered interest.

9. If a commercial building gets a new owner, can the new owner renegotiate the existing lease?

No, unless the tenant is a willing negotiator.

If you purchase a commercial building with an existing lease, the term of which extends into your ownership, then you own the property subject to that lease.

As to whether the tenant will likely be a willing negotiator… this will depend on their circumstances. In short, if there is a benefit to the tenant then they will likely be a willing negotiator. For example, if there is one year left on the lease and the tenant would like to remain in the premises for a period longer than that, then there’s no reason why you can’t negotiate with the tenant to extend the term of the lease.

If you are a landlord in this situation you need to target those things that will result in the tenant achieving an improved position, as well as you, if you are going to achieve a favourable outcome

10. Who gets to keep the registered commercial lease?

In most situations, the registered commercial lease is duplicated and both parties receive a copy.

However, only one of these copies will have a ‘registration sticker’ from Land & Property Information (LPI) affixed to it. This copy is usually held by the landlord.

• Commercial Leases: Understanding the Basics
• Commercial Leases: Get Them In Writing!

Gavin Hanrahan

Managing Partner

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Assigning a Retail Lease

Any “Retail Lease”, that is, a lease of a shop that falls under the provisions of the Retail Leases Act 1994 (usually being, but not limited to, a shop for carrying on the businesses which appear on the list set out in Schedule 1 of the Act) may be transferred or “assigned”. The most common circumstance in which a lease is assigned is when a business is sold and the sale contract includes a term requiring the vendor of the business to assign the lease to the purchaser of the business.

An assignment of a Retail Lease involves at least three parties, being:-

• The landlord, or “Lessor”, being the entity (be it a company, partnership or individual) which owns the shop.

• The outgoing tenant, or “Assignor”, the entity which currently holds the lease but wishes to assign it to a new tenant.

• The new, incoming tenant, or “Assignee”, the entity which wishes to take over the lease from the Assignor.

It is also quite usual to have further parties to an assignment of a Retail Lease, being any personal guarantors of the Assignor and any personal guarantors of the Assignee. 

The assignment process can be governed both by terms of the Retail Leases Act (“the Act”) and by the terms of the lease itself. Noting, however, that where there is an inconsistency between the lease terms and the provisions of the Act may prevail, depending on the wording of the relevant section.

The first step is for the Assignor to obtain the Lessor’s consent to the assignment. Section 41 of the Act sets out the process the Assignor must follow. Note that these obligations are on the Assignor, being the party to the lease at that point in time and falling under the provisions of the Act. The Assignee would not (unless all parties agree) usually be dealing directly with the Lessor during this process. In short, the process to seek consent to assignment of the lease includes:-

a) The Assignor is to provide to the Assignee a copy of the disclosure statement issued by the Lessor to the Assignor when the lease was first entered (see s41(b) of the Act).

b) The Assignor is to provide to the Lessor a written request for consent to the proposed assignment, including information that is known as the “Assignor’s Disclosure” – see s41(a) of the Act and Schedule 2A. 

Usually the Assignee will have already reviewed the terms of the lease and found them acceptable (for example, if the assignment is pursuant to a sale of business a copy of the lease will be attached to the sale contract). As the lease is being assigned, the Assignee will be taking the lease as-is. There is some scope for amendment of the lease, but is entirely dependent upon the agreement of the Lessor. The Lessor has no obligation to agree to any amendment to the lease.

Further, the Assignor may wish to avail itself of the protection afforded by s41A of the Act, which provides that if the Assignor also provides the documents set out in a) and b) above to the Assignee at least seven days before the assignment is effected, then the Assignor and any guarantor of the Assignor is not liable to the Lessor to pay any money due from the Assignee to the Lessor after the date of the Assignment.

The Lessor does not have to accept an Assignee if that Assignee would not be a good tenant. Section 39 of the Act sets out the only grounds on which a Lessor can refuse consent. 

If the Lessor consents the usual next step is for the Lessor to prepare a Deed of Assignment of Lease (obviously, if the Lessor does not consent the process stops there). A Deed of Assignment is not strictly required under the Act. However, it is usual practice for a Lessor to insist on this document, as it formalises the transaction and can deal with any matters that the Act does not deal with. For example, a Deed of Assignment might have a express terms providing:-

i. that the Assignor and its guarantor/s (if any) will remain liable to the Lessor in the event that the Assignee does not pay any sums owing to the Lessor during the course of the Assigned lease. Section 41A, as set out above, overrides any such provision in a Deed of Assignment, but it is common practice for Lessors to include such a provision, as it will be effective it the Assignor does not comply properly with s41A. 

ii. alternatively, that the Assignor and any guarantors are expressly released from any further liability under the lease.

iii. for any amendments to the lease agreed between the Lessor and Assignee (alternatively, this can be done by way of a further Deed of Amendment).

iv. personal guarantees for the Assignee. In this case the guarantors of the Assignee will also be parties to the Deed.

Once consent is given by the Lessor and the Deed of Assignment is entered, all that remains is to formalise the assignment, by way of stamping and lodging with the Land and Property Information the transfer of lease form.

Alternative

An alternative to the assignment process set out above is for the outgoing tenant to simply surrender the current lease and have the incoming tenant take a new lease. Unlike the right conferred on an Assignor to be able to assign a lease in accordance with s39, 41 etc of the Act there is no right to compel a Lessor to agree to accept a surrender of lease and enter a new lease with the incoming tenant. However, if all parties agree, this process can be quicker and cheaper than the assignment process set out above – particularly noting that no Assignor disclosure is required nor any Deed of Assignment.

If you are taking over a lease or wishing to assign your lease then get in touch with one of our business lawyers to see how we can assist by contacting your nearest Prime Lawyers office.  

We have offices in Sydney, Parramatta, Chatswood, Sutherland and Wollongong.

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• Lease assignments can come back to haunt you. Assignors remain liable for the obligations of the lessee under an assigned lease.

Tenants and their guarantors remain liable for the obligations of a lessee under the lease even after they have assigned the lease to someone else.

This means that if an assignee starts defaulting on their rent payments or the landlord terminates the lease for breach, the landlord can make a claim against the original lessee and their guarantors for that unpaid rent or for damages the landlord suffered in connection with the termination of the lease.

Commonly, a tenant will sell their business and assign the tenant’s lease of the premises to the buyer as part of that sale, or the tenant may simply find someone else to take their place in the premises and assign their lease to them. However, the tenant’s and the guarantor’s obligations do not end there, even if the landlord has consented to the assignment and the tenant has provided a replacement bank guarantee or security bonds. In an assignment the original tenant and its guarantors remain liable for the performance of all the obligations of the tenant for the entire term of the lease. If the assignee fails in any way, the landlord can still hold the original tenant, and its guarantors liable to meet those lease obligations. This can be especially daunting in long term leases, as such liabilities can arise many years after a lease is assigned and, worse still, will apply if an initial assignee of the lease assigns the lease to a subsequent assignee. This could even occur without your knowledge as neither the landlord or the assignee must consult with or advise the initial assignee in connection with any further assignment. This means, an original tenant and guarantor have no control at all over who is the current tenant in occupation, but nevertheless remains liable for their acts, defaults and omissions.

Outgoing lessees and their guarantors will only be released from these obligations if the lessor or landlord has expressly agreed to this in writing or a release is required by legislation.

Thankfully, the Retail Leases Act 1994 (NSW), provides that outgoing (assigning) tenants and their guarantors are released from their monetary obligations under a ‘retail shop lease’ to an incoming (assignee) tenant, if they take certain steps required by the Act such as making the required disclosures to the assignee.

Unfortunately, the same protection is not available to non-retail tenants and guarantors. As releases that are sought will need to be negotiated with the landlord as part of the assignment of the lease. If the landlord will not agree to this then the assignor and their guarantor will remain at risk of being required to perform the lease obligations if the replacement tenant fails to do so or is no longer able to do so.

Generally, an original tenant, and their guarantor’s liability, will end at the end of the current term of the lease, that is, it will not apply to any option periods.

If a landlord makes a claim against an original tenant or their guarantors, it is important to seek all required information in relation to that claim, including details of any relief provided to the current tenant. This is relevant as a landlord cannot pursue the original tenant and guarantor for matters that it has released the current tenant from.

Furthermore, if the landlord does make a claim against an original tenant or their guarantor for the default of the current tenant, the original outgoing tenant and their guarantor will usually have a right of indemnity for the claim from the current tenant. Although, the reason a landlord makes a claim against the original tenant or their guarantor in our experience is that the current tenant is insolvent, making this right of little value.

This article is for general information only and not legal advice. Legal advice should be obtained before taking any action or otherwise rely upon the content of this article in any way.

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Signing a lease and moving in

If your tenancy application is successful, you will then need to pay the rental bond, sign the lease, fill in the condition report and connect utilities.

Steps to moving in

Sign the lease and collect the keys.

If your application is successful, the landlord or agent will take steps to sign a  tenancy agreement  with you. Check that you have their contact details so that you can follow up or ask questions.

Before you sign an agreement or move in, the landlord or agent must give you:

• a copy of the tenant information statement (available in other languages) 
• a copy of the proposed tenancy agreement
• 2 copies, or one electronic copy, of the condition report completed by the landlord or agent 
• a copy of the by-laws , if the property is in a strata scheme
• an invitation to lodge the bond using Rental Bonds Online or the opportunity to lodge using a paper form or in person at Service NSW.

Read through all the information you are given and make sure you understand what you are signing.

See our tenant's checklist for links to downloadable copies of these documents.

When you sign the agreement, the landlord must give you:

• the signed tenancy agreement
• certificates of compliance for any swimming and spa pools.

Read more about residential tenancy agreements .

Keys or other opening devices or information (for example, a garage remote or security access codes) must be also made available to you and any other tenant named in the tenancy agreement as soon as you have signed the lease. You cannot be charged for the first set of these items. These items should be for the rental property and for any common property that you are entitled to access.

Pay the rental bond and up to 2 weeks rent in advance

You may be asked to pay a  rental bond and rent in advance . You can tell the landlord or agent that you want to use your  existing Rental Bonds Online login  to pay the bond or they should invite you to  sign up to use Rental Bonds Online  for the first time. Alternatively, you can ask to lodge your bond via a paper form.

You would normally pay the bond before you sign the lease if you are using Rental Bonds Online.

Fill in the condition report and arrange for any repairs

You will be asked to fill in a  condition report . Make sure you take plenty of photos while you are filling it out and that the landlord or agent has filled it out as well. If there are any things that need to be fixed before you move in, make sure you have an agreement in writing that these  repairs will be done .

Set up utilities and services

Electricity, gas  and  water  are essential services that must be supplied to the rental property. Your tenancy agreement will state who is responsible for these utilities in a rental property and what is or is not included in the rent.

Telephone and internet services  are up to you to set up. You must have written permission from your landlord to install a telephone or internet service, which cannot be unreasonably refused as this is considered an  acceptable 'minor change'  to the property.

Get help with moving in

Find a reliable removalist . If you need extra help with moving or other rental costs,  find out what you might be eligible for .

Costs you may need to pay for

• You may have already paid a holding fee of no more than one week's rent. This deposit should go towards your rent  if you sign the tenancy agreement for the property .
• Rental bond of no more than 4 weeks rent. Use your  existing Rental Bonds Online account ,  or  sign up to use Rental Bonds Online  to pay.
• Rent in advance  of no more than 2 weeks. Your landlord or agent must offer you at least one  way to pay rent with no extra costs (apart from bank or account fees).
• Fee for registering the lease with NSW Land Registry Services  if it is a fixed term agreement of more than 3 years.

Keep all receipts

Make sure you keep  receipts  for everything you pay for. If you are going to be paying rent by direct deposit, your bank records will act as your receipts.

Get help with costs

You may be able to get help to secure a rental property and pay for rent and other costs.  Learn more about what help is available  and who is eligible.

Costs you do not have to pay for

Landlords or agents must not charge you:

• for the cost of preparing or filling in the tenancy agreement
• more than two weeks rent in advance
• more than four weeks rent as a rental bond
• for initial copies of keys or other opening devices
• a bond to allow you to keep a pet on the property.

Apply for a Rentstart loan

If you need help with paying the bond or rent in advance , you can apply for a Rentstart loan. This scheme helps low income earners to rent in the private rental market. Apply through Department of Communities and Justice (DCJ) Housing or call 1300 468 746 .

Related information

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• Minimum standards for rental properties
• Residential tenancy complaints

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Important Considerations in Seeking a landlord’s Consent to Assignment

This article explores the key points which tenants must consider when seeking their landlord’s consent to an assignment of their lease. The topic may conveniently be divided into five sections, as follows:

• has an application for consent was submitted by the tenant? 
• what information can the landlord request in respect of the assignee?
• did the landlord withhold its consent to the assignment?
• was it unreasonable for the landlord to withhold its consent, contrary to s133B of the Conveyancing Act 1919 (NSW) (the Act ) (which provides that, where a lease requires the landlord’s consent to an assignment of the lease, the landlord’s consent must not be unreasonably withheld)?
• will the tenant be released from all future liability under the lease after the assignment?

Has an application for consent been submitted?

The starting point for a tenant is to submit to the landlord (usually) a written request to assign its leasehold interest in accordance with the terms of the lease ( Tenant’s Notice ). The landlord’s obligation to consider the tenant’s request for assignment only arises upon receipt of the Tenant’s Notice. In decision of Tamsco Ltd v Franklins Ltd 1 , the Court emphasised the significance of the tenant actually having to actually request the landlord’s consent. 

This is the case even where ‘the assignee is a person to whom there could be no reasonable objection 2 .  Before the tenant provides information relating to, for example, the assignee’s financial capabilities required for obtaining the landlord’s consent, it must properly communicate its request for consent to the landlord (in compliance with not only the assignment provisions, but also the notice provisions under the lease). 

What information can the landlord request in respect of the assignee?

The starting point here is to consider the terms of the assignment provision of the lease, which should specify the information the tenant must provide to the landlord in respect of the assignee. 

For example, many leases will require the tenant to prove to the landlord that the assignee:

• is a respectable, responsible and solvent person, capable of complying with the terms of the lease; and
• has adequate financial standing not inferior to that of the tenant. 

In this respect, it is common for tenants to provide to the landlord copies of the assignee’s tax returns and balance sheets (to evidence the adequate financial standing and solvency) and references from peers to evidence their responsibility and respectability in operating their business within the relevant industry. 

It should be noted that a landlord may not ‘oppressively demand extensive particulars or insist upon the equivalent of answers to interrogatories’ 3 .  All that is required is fair dealing between the parties to enable the landlord to make a ‘reasonable decision’ 4 .  So, it is important that landlords do not request any information inconsistent with what is permitted by the terms of the lease or which is irrelevant for the landlord making an informed decision in relation to whether its consent should be provided. 

Did the landlord withhold its consent to the assignment? 

The question here is whether after:

• formally requesting the landlord’s consent; and
• submitting to the landlord all information relating to the assignee required by the landlord (as dictated by the assignment provisions in the lease) to assess whether its consent should be provided to the assignment,  the landlord has refused to consent to the proposed assignment. 

In practice, where a landlord refuses to consent to an assignment of the lease, it will serve a notice to that effect on the tenant. However, where landlords are silent on whether they have consented to the assignment, their conduct becomes relevant for consideration. Courts have decided that some landlords, by virtue of their conduct alone, have consented to assignments. This occurred in Chamberlain Group Pty Ltd v Kids for Life Academy Pty Ltd 5 ,  where the landlord, for example:

• had knowledge that the assignee was already occupying the premises and did not object to such occupation; and
• collected rent from the assignee 6 .   

If the landlord did withhold its consent, was it unreasonable for it to do so? 

A landlord will have typically acted unreasonably where it has refused to provide its consent to an assignment for purposes unconnected with the subject matter of the lease 7 . For instance, it is generally unreasonable for a landlord to refuse to provide its consent to obtain a ‘collateral advantage’ which has no relationship with the terms of the lease. 

An example of this may include a landlord making the granting of its consent conditional upon a lump sum cash payment by the tenant to the landlord, an advantage which the landlord would not have otherwise been entitled to under the lease.

Will the tenant be released from all future liability under the lease after the assignment?

For commercial leases, if a lease is silent in relation to whether a tenant is released on assignment, then the tenant will not be released on assignment.  

For example, this will mean that where the assignee fails to pay rent under the lease after the assignment occurs, the landlord may still sue the tenant to recover the unpaid rent. 

If a tenant wants to be released on assignment, it is important for it to include an express release on assignment in the lease agreement or negotiate an express release within the deed of consent to assignment.

What does this mean for tenants?

Tenants must ensure that they have properly communicated to the landlord their request for the landlord’s consent to an assignment of the lease. It is always prudent to prepare the request in writing and serve it on the landlord in accordance with the notice provisions in the lease. 

Where the landlord has considered the request and unreasonably refuses to provide its consent, there are remedies available to tenants. Notably, tenants may seek a declaration by the NSW Supreme Court to the effect that the landlord has unreasonably withheld its consent to the assignment, contrary to section 133B of the Act. 

What does this mean for landlords?

When a tenant makes a formal request for consent to an assignment, landlords must ensure they are not taken to have impliedly (by their conduct) consented to the assignment of the lease. Landlords should:

• promptly acknowledge receipt of the tenant’s request for consent to the assignment; and
• request financial (and other) information relating to the proposed assignee in accordance with the terms of the lease (which, practically speaking, should be done at the same time they acknowledge receipt of the tenant’s request).  

This will equip landlords with all information they require to make a proper and informed decision as to whether they ought to be consenting to the assignment of the lease. However, landlords should note that they should only request information which would have a direct impact on their willingness to provide or withhold their consent. 

Furthermore, landlords must note the importance of ensuring that the tenant is not released on an assignment of the lease. This may also make leased assets more ‘bankable’ and may increase the capital value of landlords’ assets.

Contact us 

If you require any assistance relating to retail and commercial leasing transactions, commercial acquisitions and disposals and other real estate transactions, contact Partner John Frangi on 0417 252 203 or by email . 

1  [2001] NSWSC 1205.  2  Ibid [37].  3  Daventry Holdings Pty Ltd v Bacalakis Hotels Pty Ltd [1986] 1 Qd R 406, 543. 4  Ibid.  5  [2015] NSWCA 241. 6  Ibid [27]–[28].  7  Ashworth Frazer Ltd v Gloucester City Council [2001] UKHL 59 [3].

Bobby Nader

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Form   07L  (PDF 300 KB)

Dealing type  - L

Legislation  - s53 Real Property Act 1900

• if the lease is dated before 1-1-2008
• in the case of a lease in respect of which a lump sum is to be paid, whether 'rent' or 'premium', regardless of the date.

Note  Where stamp duty is required:

• any alteration to the reference to title or premises description, or increase of the term or annual rent must be marked
• the duplicate copy of the lease marked with $2 duty is acceptable.

Not required for a lease dated on or after 1-1-2008 where no lump sum payment is involved nor, regardless of the date, for a lease:

• where the rent is less than $20,000 per annum
• of premises in a retirement village within the meaning of the Retirement Village Act 1999
• to a retired or disabled person for residential accommodation and not for profit by the lessor
• of premises to the Home Care Service of NSW
• pursuant to Part V National Health Act 1953 (Commonwealth).

Certificate of Title  - required for:

• the land or premises affected by the lease
• the common property where land is contiguous to or relevant to a strata scheme is leased as additional common property
• the association property , ie lot 1 in the community title scheme, where land adjacent to a community title scheme is leased as additional association property
• the servient tenement where an easement is included.

Not required where the registered proprietor (lessor) is the Land Administration Ministerial Corporation.

NOS form  - not required

Standard form of Caveat  - prevents registration.

Does not prevent registration of a lease by a mortgagee or chargee in possession.

Priority Notice noted on the Register  - see  Priority Notice  page.

An expired lease will not be accepted for lodgment under any circumstances, even if it is accompanied by a variation of lease extending the term.

A lease for a term exceeding 3 years must be registered in order to pass an estate to the lessee. A lease for a term of 3 years or less, including an option to renew, may be registered. See Baalman And Wells, Land Titles Office Practice, Lawbook Co. 2001 [280.100].   

Minister's consent may be required for certain Crown land tenures.

The lease must not include any reference to the lessor or lessee being a trustee, executor or administrator for another party.

A current lease noted on the Register may be surrendered by an incoming lease, i.e. an implied surrender, if the incoming lease:

• is to all of the current lessees, or is accompanied by:
• a Surrender Of Lease form 07DL as regards those lessees not included in the incoming lease or
• the consent of the current lessee
• affects at least the same land or premises
• commences before the expiry of the current lease and
• is not made subject to the current lease.

An extra fee is payable for the implied surrender.

Where a current registered lease with different lessees affects the same land or premises and the terms overlap:

• the current lease must be noted in the Encumbrances. The incoming lease will be treated as if it is a concurrent lease ; or
• the incoming lease must clearly indicate that it is a concurrent lease or
• an accompanying letter must state that it is a concurrent lease, or
• the current lease must be removed.

For a lease involving common property or an owners corporation, go to  Lease of land for common property or association property  page and also see Baalman and Wells, NSW Land Registry Services Practice , Lawbook Co. 2001 [535.500].

For a lease involving association property or an association of a community title scheme, go to Lease of land for common property or association property  page and also see Baalman and Wells, NSW Land Registry Services Practice , Lawbook Co. 2001 [68.210.].

(A) The reference to title for the land affected by the lease must be stated. 

Where the lease affects a lease folio complex (either commercial or retirement village), reference must be made to the relevant lease folio number (reference to the Head Title should also be included). A full premises description, including reference to a plan if required (see below), must also be stated.

An extra fee is payable where the land description is reliant on a plan annexed to the lease.

A lease of:

• whole of the lot - do not show address
• the premises which is the whole of the lot - do not show address
• premises which is not the whole of the lot  -  the description of property leased must refer to part certificate of title followed by the premises description (see premises below), e.g. Part 1/123456 being Unit 1, 11 Smith Street, Sydney
• part of the land for 5 years or less , including any options to renew, must fully describe the affected part by reference to a registered plan, a plan attached to the lease, or to another registered dealing. See Greg Stilianou, Land Titling Law and Practice in NSW, Lawbook Co. 2013 [12.370]
• part of the land for more than 5 years , including any options to renew, other than a lease lodged by the Commonwealth of Australia, must describe the affected part by reference to a registered plan of subdivision that has been approved by the Local Council. See s23F and s23G Conveyancing Act 1919 (formerly s327AA Local Government Act 1919 ). Also see Greg Stilianou, Land Titling Law and Practice in NSW, Lawbook Co. 2013 [12.380]
• premises must be fully defined by either: »    a unique description such as a shop name or number together with a full postal address (where the shop does not have a shop name or number and it is the only shop within the lot(s) affected by the lease,  a letter stating that information must accompany the lease), or »    a plan annexed to the lease. Vague or ambiguous descriptions such as 'including rear office' are not acceptable. For leases of adjoining air space see Registrar General's Guidelines for Deposited plans .
• premises for a term exceeding 25 years must be accompanied by a plan defining the premises . The plan does not require local council's approval. An extra fee is payable for the plan. See See Greg Stilianou, Land Titling Law and Practice in NSW, Lawbook Co. 2013 [12.400]
• premises within a retirement village for a term exceeding 25 years requires the lodgment of a    Retirement Village Memorandum  with an annexed sketch plan setting out the location of the individual villa, unit, apartment etc within the complex prior to lodgment of the lease.
• Land excluding premises must be considered as a lease of part of the land. A lease of land excluding premises being for a term of 5 years or more, including any option of renewal, other than a lease lodged by the Commonwealth of Australia, must describe the affected part by reference to a registered plan of subdivision that has been approved by the Local Council. See s 23F and s 23G Conveyancing Act 1919 (formerly s327AA Local Government Act 1919 ). Also see Greg Stilianou, Land Titling Law and Practice in NSW, Lawbook Co. 2013 [12.380].  Submit all cases to SM 99 .
• car spaces intended to be included in the leased premises must be clearly numbered.  Where car spaces are not clearly identified, e.g. 'together with 1 car space' rather than 'car space No. 1', a requisition will be raised. Reference to car spaces elsewhere in the lease will be regarded as rights and will not be included in the lease notification.  Where the car spaces are also shown in an annexed plan, dimensions of the car spaces must be included in the plan.
• public reserve by a Local Council must not exceed 21 years, including any options to renew.
• creating an easement , enter the reference to title for the servient tenement in ITS. See s47(2) & (3)  Real Property Act 1900 ; Baalman And Wells, Land Titles Office Practice, Lawbook Co. 2001 [140.450].

Premises and part descriptions affecting multiple titles

For a lease of premises affecting multiple land titles in the same ownership, and the lease has a single premises description, e.g: level 1, floor 1, suite 1, shop 1 etc., the lease may be registered without referral to SM99.

For a lease of part of the land that cannot be defined as the 'whole' affecting multiple land titles in the same ownership:

• a plan is required to define the part; and
• a single lodgment fee together with an extra plan fee is payable where plan is annexed to dealing (see above regarding 'part of the land for 5 years or less' & 'part of the land for more than 5 years') . Submit all cases to SM99

A lease of part of the land or premises affecting multiple land titles in different ownerships must be lodged as a separate lease for each land title in different ownership. Submit all cases to SM99

A lease by the same lessee of different premises on 2 or more adjoining land titles in the same ownership can be:

• lodged as a single lease;
• must describe the premises as they affect each respective land title (e.g. shop 1 in 1/SP723 and shop 2 in 2/SP723 respectively); and
• will be charged an extra fee for each additional land title.

Submit to DRD2 for approval as a multiple instrument.

Register premises against the land title which it affects: e.g. shop 1 on 1/SP723, shop 2 on 2/SP723

(C) The full name of the lessor must be stated and must be identical to the registered proprietor as shown on the Register.

A lease by less than all of the registered proprietors may be lodged as regards their interest or share.

For a lease by:

• a life tenant
• a mortgagee in possession
• a registered proprietor holding an estate as executor or administrator, the term must not exceed 3 years, including any options to renew, see s153  Conveyancing Act 1919
• a registered proprietor holding an estate as a trustee, the term must not exceed 5 years, including any options to renew, except where it is allowed within the trust instrument and evidence to that effect is lodged with the lease. If in doubt refer to LEG99
• the Owners corporation of common property in a Strata scheme, see Baalman And Wells, Land Titles Office Practice, Lawbook Co. 2001 [535.600]
• the Association of a Community Title scheme, see Baalman And Wells, Land Titles Office Practice, Lawbook Co. 2001 [68.135f.].

A lease affecting a multiple ownership title may contravene s23F and s23G Conveyancing Act 1919 (formerly s327AA Local Government Act 1919 ) where it is not between the registered proprietors themselves.

(D) Where other mortgages, leases, charges, and/or covenant charges are lodged together with the lease, the Encumbrances must indicate the priority of registration, or an accompanying letter by the party ceding priority must set out the order of registration.

A writ must be noted in the Encumbrances, or the Court must consent to the lease, or the writ must be removed.

(E) The full name of the lessee must be stated.

A lease to Her Majesty Queen Elizabeth the Second must indicate the relevant statutory authority. The name of the statutory authority will be included in the notification, e.g. 'Her Majesty Queen Elizabeth the Second (State Rail Authority)'

For a lease to an owners corporation or a community, neighbourhood or precinct association of land to be added to the common property or association property go to Lease of land for common property or association property  page and also see Baalman and Wells, NSW Land Registry Services Practice , Lawbook Co. 2001 [535.500 and 68.210].

(F) Tenancy/shares must be stated where there is more than one lessee.  Reference to the tenancy/shares will not be entered on the Register.

Item 1. Term

The term stated must agree with the period of time covered by the commencement and expiry dates stated in Items 2 and 3.

• including a carry-over term
• for the life of the lessee or for the life of another person or
• that is uncertain as regards its term, e.g. until the happening of some event, or measures its term other than in years or a period between specified days,

will state 'See Lease' in the lease notification in lieu of an expiry date.

See Greg Stilianou, Land Titling Law and Practice in NSW, Lawbook Co. 2013 re:

• leases: duration/term of a lease and the description of leased land [12.320]
• certainty of term [12.330].

A lease for a specific period that is not continuous, eg for particular days or weeks of the year, will include reference to the specific time periods in the lease notification. 

Item 2. Commencing Date

The date of commencement must be stated and can be in the past. The lease may commence on a specific date and/or the happening of a certain event. The term of the lease must commence within 21 years of the date of the lease. See Greg Stilianou, Land Titling Law and Practice in NSW, Lawbook Co. 2013 [12.340].

Item 3. Terminating Date

The date of termination must be stated or be ascertainable from the lease.

A lease will not be registered if the term of the lease has expired, regardless of the lease:

• being lodged before the expiry date,
• containing an option to purchase and/or renew, or
• being accompanied by a variation of lease extending the term.

Item 4. Option to Renew

(must be completed, or be deleted and verified)

The period or periods of time for the option(s) to renew and the relevant clause number in the lease annexure or memorandum must be stated.  Any clause referred to must contain the details of the option to renew. Reference to several option periods will be included in the lease notification.

Item 5. Option to Purchase

The relevant clause number of the option to purchase in the lease annexure or memorandum must be stated.  The clause must contain an option for the lessee to purchase the land. Reference to a clause containing an option of first refusal, ie an option for the lessor to sell the land to the lessee in the first instance, is unacceptable.  Note  An executor, administrator or trustee cannot grant a lease with an option to purchase.

Item 6. Rights

A lessor may reserve or a lessee may grant certain rights, e.g. right of entry, use of stairways, together with car spaces etc. The relevant clause number of the rights in the lease annexure or memorandum must be stated. If the rights constitute an easement the certificate of title for the servient tenement is required.

Item 7. Annexures

Additional clauses and covenants relating to the lease may be contained in an annexure.  Plans, consents and other documentation intended to be filed with the lease must be treated as annexures.  The annexure must be identified, e.g. "Annexure A".  Each page must be numbered.  The first and last pages and any alterations or additions must be signed by all parties.

Item 8. Memorandum

The clauses and covenants relating to the lease may be contained in a memorandum filed in NSW LRS. Addition to, modification, or deletion of matters referred to in the memorandum is acceptable by way of a schedule attached to the lease.

Item 9. Rent

The item/clause number and identity of the annexure containing details of the rent payable must be stated.  Note  Any alteration to the rent must be marked by Revenue NSW.

(H) The dealing must be executed by the lessor and lessee and be witnessed, or be executed on their behalf as follows:

1    the power of attorney does not have to be registered in the General Register of Deeds where the term of the lease, including any options to renew, does not exceed 3 years, see s52 Powers of Attorney Act 2003.

2    Where the lessor or lessee is the Owners Corporation of a Strata scheme, execution must take the form as set out in Strata Schemes Approved Form 23  (PDF 128 KB).  The following certificates are also required:

• Strata Schemes Approved Form 13  (PDF 23 KB) and
• Strata Schemes Approved Form 10 (PDF 8 KB) where the initial period is not shown as expired on the common property title.

Where the lessor or lessee is the Association of a Community, Precinct or Neighbourhood scheme, execution must take the form as set out in Community Title Schemes  Approved Form 18  (PDF 20 KB).  A certificate as in Community Title Schemes Approved Form 21 (PDF 20 KB) is also required.

See execution requirements for companies, witnesses etc. pages

(I) The statutory declaration must be completed where an expired lease containing a current option to renew or purchase affecting the same land or premises as the subject lease is noted on the Register.

The statutory declaration must be made by the lessor, the lessor's attorney or solicitor, or an authorised officer (the nature of the authority must be disclosed) and must be witnessed by a prescribed functionary. Where the declaration has been made outside NSW reference to the Oaths Act 1900 must be deleted, the relevant Act must be inserted and the alteration verified.

Staff processing information 

Where the lease affects a folio of the Register bearing the notification:

'DP... Note: Plan Is A Subdivision For Lease Purposes - s289K(3) Local Government Act 1919',

the following points apply:

• the term together with any option to renew cannot exceed 20 years and
• the lease may be accompanied by a letter requesting the issue of a certificate of title for the leasehold estate; no fee is payable (paid with plan).

All leases and any other dealings affecting:

• titles held by SD2
• titles for retirement villages (notification code RVT in the Second Schedule) and
• Sydney International Terminal (Sydney (Kingsford-Smith) Airport), ie the leasehold title Vol. 8660 Fol. 50.  Note  Leases and sub-leases should affect Vol. 8660 Fol. 50 and not the fee simple title 8/1050923;

must be referred to SD2.  The certificates of title for the references marked 'L' are permanently held with SD2 and 'L' automatically appears in the CT IND field in ITS. If the certificate of title is produced it must be connected to the case before referral.

Note  Some computer folios issued for lease complexes are permanently held with SD2 and 'L' automatically appears in the CT IND field in ITS. The folio will have a Note (NB): 'Refer All Dealings To SD2, Folio Identifier Permanently Held'.

If in order proceed with registration of a lease:

• of the whole
• of premises where the term does not exceed 25 years.

Refer to DRD2

A lease affecting a multiple ownership title that is not between the registered proprietors.

Refer to SM99

• of adjacent land or land otherwise relevant to strata scheme s.25(1) Strata Schemes Development Act 2015 for addition to the common property of a strata scheme
• of adjacent land for addition to the association property of a community, neighbourhood or precinct scheme
• of an electricity sub-station
• of part of the land
• of premises for a term exceeding 25 years
• of land excluding premises
• that creates an easement
• that refers to a plan
• that refers to a maritme structure, e.g a berth, berthing area, boardwalk, jetty, mooring, pier, marina
• where a leasehold title is to be created.

Refer to SD31

• involving an Aboriginal Association or corporation
• involving the NSW/Local Aboriginal Land Council
• by The State of New South Wales
• by a Reserve Trust
• by National Parks and Wildlife, i.e. Kosciuszko leases

Refer to Legal through the Senior Examining Officer

• by a chargee in possession
• by a mortgagee in possession
• containing a holding over provision where the lease has expired before it is in order for registration
• with an uncertain term or a term measured in other than days/years.

Registration procedure

Lease of whole

PRIME CODE    L

CODE (name)    P, C or Q  [name of lessee]

LEASE EXPIRY DATE    [date] or click See Lease

OPTION OF RENEWAL    ... Years [And ... Further Options Of ... Years]

OPTION TO PURCHASE    click Yes or No.

Lease of premises

PREMISES DESCR    Of [description of premises including address].

Note  Some computer titles have a separate AA or LADD code notification that sets out the full address of the premises affected by leases.  The notification for these leases must refer to the shop, suite etc number but need not include the address.

Lease with a specific future commencement date

PREMISES DESCR    Of [description of premises including address] Commences [date].

Note  If the future commencement date cannot be ascertained enter 'See Lease For Commencement Date'.

Concurrent lease

Usual lease entry.

ADD. TRANSACTION    UNDR

PRIME CODE    code of current registered lease as shown on the Register

PRIME NUMBER    number of current registered lease

SUB CODE    ULC

DETAILS    Concurrent Lease.

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Electronic dealings that require consent to be attached

The removal of CoRD Holder consents does not change the requirement for third parties to provide their consent in certain instances before a dealing can be lodged for registration. This document is intended to be a quick reference guide for practitioners (and any other users of the eConveyancing system) as to the consents that are required for certain dealing types. Note that these consents are not new and have always applied, even when CoRD Holder consents existed.

The list below is limited to those dealings that are available for electronic lodgment (excluding via a Dealing with Exception ). Also, consent from a caveator(s) are not dealt with below and are assumed to apply to all dealings. Please refer to the Registrar General’s Guidelines for a full and comprehensive guidance on all other requirements for each dealing.

Where consent is required, a suggested template (suitably modified) can be used by the consenter.