Authors: Chris Drayton, Partner and Ryan Murray, Lawyer
The Property Law Act 2023 (Qld) (“the Act”) introduces a comprehensive set of amendments to the law concerning property transactions in Queensland.
The Act comes into force on 1 August 2025 and has far-reaching and broad consequences on the way landlords transact with all their tenants (for all types of commercial leases). In anticipation of this date, we take this opportunity to summarise the obligations and limitations being imposed by the Act:
Assignment of Lease
Tenant Request for Consent
The Act introduces a prescribed process a landlord must follow in the event a tenant wishes to assign or sublease their lease, which applies regardless of the terms of the lease document. This process will apply to all leases, regardless of whether entered prior to the Act commencing.
A tenant may request a landlord consent to an assignment or sublease of their existing lease, and in doing so must provide relevant information to the landlord. A landlord may request further information if they consider necessary.
A landlord must not unreasonably withhold consent to an assignment or sublease and must provide a decision to a tenant within 1 month of a request being made. A tenant is entitled to approach the Court for a determination on a proposed assignment or sublease if the landlord does not consent.
Landlords should be aware that the Act overrides provisions of a lease relating to assignment and subleasing.
Assignee’s Liability
An assignee of a lease assumes liability for all an outgoing tenant’s obligations and liabilities under a lease, including those arising prior to the assignment date, unless there is agreement to the contrary.
However, an outgoing tenant will automatically be released, subject to agreement to the contrary, from obligations and liability where the assigned lease is then further assigned. This release similarly applies to any guarantors of the original tenant.
Default and Termination
A landlord may only terminate a lease for a default by a tenant (including a default on the obligation to pay rent) if prior to termination, they serve a notice in the prescribed form on the tenant that:
- states the breach;
- outlines the step to remedy the breach, providing a reasonable time to do so; and
- outlines the reasonable amount claimed in financial compensation, if relevant.
In determining the reasonable time for a breach to be remedied, a landlord is required to consider the nature and extent of the breach.
The Act also requires that any breach notice be served on:
- a mortgagee of a lease;
- any guarantor under a lease;
- any sublessee under a lease; and
- any assignor of a lease where they have not been released.
The requirement to serve notice does not apply where a tenant has abandoned the premises, however notice should still be served on any mortgagee, guarantor, sublessee or assignee after the landlord has re-taken possession.
Exercise of Option
Where a lease contains an option for renewal or extension that is conditional upon:
- a condition precedent;
- the tenant not being in default of the lease at the time of exercise; or
- the tenant complying with certain formalities to renew (not including compliance with a deadline for a renewal notice to be served).
A landlord may only refuse to grant a renewal due to a tenant’s failure to comply with the conditions noted above if a landlord first provides the tenant with a notice setting out the reasons for the landlord’s refusal to renew within 10 business days of the landlord being informed of the tenant’s intention to exercise the option term.
After receiving that notice, the Tenant has one month to apply to the court to challenge the landlord’s reasons for refusing the option.
Implied Terms
The Act expressly incorporates a range of standardised terms into every lease agreement, except where a lease expressly negates the operation of the standard terms.
Whilst some terms are inferred with no reservation, i.e., the duty to pay rent when due, other terms may be ordinarily subject to commercial negotiation, such as an automatic abatement of rent in the event of damage to the premises.
Sale or Transfer of Land
The Act makes clear that the rights granted under a Lease run with the land, regardless of whether disclosure of the Landlord’s sale or transfer of its interest in the land is made.
Importantly for an incoming landlord of commercial premises, upon purchasing land, it is important to ensure notice has been provided to any tenant to redirect the payment of rent (typically done by way of an Attornment Notice). A failure to provide a tenant with a notice of sale releases the tenant from any obligation to pay a further amount if the incoming landlord cannot recover the previous rental payment from the outgoing landlord.
Other Considerations affecting Landlords: Sale of Land – Seller Disclosure Statement
The owner of a land who intends to sell must provide a seller disclosure statement to a potential purchaser prior to the exchange of contracts.
The disclosure statement is in a form prescribed by regulations (currently available here) and requires the disclosure of certain information and documents relating to the land, including disclosures concerning contamination, encumbrances, leases, rates and levies (if the property is part of a body corporate or community titles scheme).
In transactions worth $10 million or greater, the buyer may elect to waive the requirement for a disclosure statement to be provided.
Failure to comply with the disclosure requirements may give rise to a termination right in favour of the purchaser.