Written by: David Rule
Tens of thousands of people are either owners of commercial property or business operators who lease commercial property in Queensland and those commercial leases are a very important factor in the operations of their businesses. There is a big change coming to property law in Queensland which will have a significant impact on the way these leases operate.
The Property Law Bill 2023 was introduced into the Queensland parliament earlier this year and is expected to be passed in the coming months. The Bill will replace the current Property Law Act 1974, which has not been significantly amended since its introduction almost 50 years ago.
The Bill makes a number of significant updates including removing outdated and unnecessary provisions related to old English systems of property ownership, incorporation of terms related to electronic conveyancing, a required disclosure scheme when selling property, and, significantly, changes to the rules around commercial leasing.
The Bill increases certainly around lease covenants and enforceability. Some terms within leases are only binding to the original parties to the lease, whereas some are considered more important and are deemed “covenants that touch and concern the land”, which bind successors to the lease – for example, if the landlord sells the property, and the buyer becomes the new Landlord or the tenant sells their business and the lease is assigned to a new tenant. The Bill provides that all terms within leases are considered covenants enforceable on sale or assignment, unless they are expressly excluded or deemed personal to the original parties.
The Bill also changes requirements for when leases are assigned by the tenant, for example, if a business is sold and the new owner of the business becomes the tenant under the lease. Theses assignments require the consent of the Landlord, and leases often contain clauses in them to deal with assignments such as this. However, during business sales, the processes involved with landlords often significantly slow down the process for the seller and buyer of the business (outgoing tenant and incoming tenant).
The Bill makes legislative changes which forces landlords to consider and make a decision on such a request for assignment within one month of the request. If the landlord fails to consent within this timeframe, the tenant can make an application to the court, which the Bill proposes to give broad powers to make appropriate orders of assignment.
These are just some of the big changes coming to commercial law and property law in the coming months. Stay tuned because, in a future article, we will touch on how the new legislation will impact sellers and their requirements to disclose information to buyers, both of residential and commercial property. Contact our commercial team today for more information.
The information contained in this article is for general informational purposes only and is not intended to provide legal advice or substitute for the advice of a professional. This information does not consider your personal circumstances and may not reflect the most current legal developments. Should you need advice, please contact our firm for targeted information relating to personal your situation.