When entering into a commercial lease, a common consideration for tenants is the question of whether they require the lease to be registered.
To “register a lease” means to lodge the lease document with the Queensland Titles Registry for registration. Upon registration, the lease is recorded on the indefeasible title for the premises in the Freehold Land Register. While a lease does not require registration to be valid, noting the tenant’s interest in the property in this way provides certain protections.
Benefits of Registration
The main benefit of registering a commercial lease is that the tenant will obtain indefeasiblity of title, provided the relevant requirements have been met. Broadly, the concept of indefeasibility of title means that title reflects (subject to certain exceptions) the interests in the land and provides for the priority of such registered interests.
The most common examples of protections offered by registration of a lease are:
- In the event the premises is sold.
The landlord may sell the premises, and the buyer of the premises will be bound by the lease. The tenant will also keep the benefit of any options to renew the lease. While it is common practice to insert a clause into the lease requiring the landlord to obtain a covenant by any buyer in favour of the tenant to be bound by the terms of the lease, this will not offer the same level of protection as that obtained by registering the lease.
- In the event the landlord’s mortgagee takes possession of the premises.
If the landlord’s mortgagee had consented to the lease prior to registration, the mortgagee will be bound to recognize the lease in the event they take possession of the premises and/or sell the premises.
Section 185(1)(b) of the Land Title Act 1994 (Qld) is an exception to indefeasibility of title, and effectively means that short leases (for a term of 3 years or less) do not need to be registered to obtain protection.
General Requirements for Registration
It is important that any proposed lease to be lodged is prepared correctly from the start. This is due to the Queensland Titles Registry’s various requirements for a lease to be capable of registration, including that the lease document itself must be on the appropriate Land Titles form. If the lease is to be for part of a lot, a sketch plan will also need to be prepared in accordance with the Registrar of Titles Directions for the Preparation of Plans and attached to the lease. Depending on the arrangement between the parties, the tenant will often be the party responsible for the costs of registering a lease.
As noted above, if there is a mortgage registered on the title to the premises, it is important that the consent of the mortgagee be obtained in the necessary form and also lodged with the lease.
Preparation and registration of leases can be complex and require careful consideration of the relevant legislation and caselaw. To ensure that your rights as a tenant are protected, we always recommend obtaining legal advice.
If you require advice or assistance with your lease, contact the experienced team at Miller Sockhill Lawyers on 07 5444 4750 and one of our friendly team members can answer any questions you might have.