Are you selling a business or leased premises? Or struggling with the written assignment?Â
In this video John Gallagher navigates the legal intricacies surrounding the assignments of commercial leases in Queensland, providing valuable insights for business owners, landlords, and potential assignees alike.
There are many intricacies of assigning a lease of real estate in Queensland, including the significance of obtaining the landlord's written consent when selling a business conducted from leased premises. The lease included when transferring business real estate will often require you to satisfy the landlord of the assignee's capacity to operate the business.
While a landlord cannot unreasonably withhold consent, the tenant must typically demonstrate the proposed assignee's business experience and financial capacity to operate the business as part of the lease assignment process.Â
Landlord's Consent and Its Implications
The landlord's consent is commonly formalised through a deed, including a covenant from the assignee to adhere to the lease terms.Â
Crucially, obtaining consent does not automatically release the outgoing tenant from ongoing liability unless explicitly agreed upon by the landlord within the lease assignment.Â
In cases where the new tenant defaults after the business sale, the outgoing tenant can still be held responsible for lease breaches. Â
Exception for Leases Regulated by the Retail Shop Leases Act
A notable exception is outlined for leases entered after 2016, regulated by the Retail Shop Leases Act. In such cases, the outgoing tenant is automatically released from liability, provided specific disclosure requirements under the Act are met.Â
It is paramount that stakeholders be mindful of these disclosure requirements and seek legal advice to ensure compliance and avoid potential pitfalls during the lease assignment process.Â
For legal advice regarding commercial or retail leasing, please don’t hesitate to contact the Argon Law team, and visit our website for a series of informative articles and videos.