assignment of lease queensland

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Transfer of lease toolkit

This toolkit details how to assess duty on the transfer of a lease. See how to lodge online and the records you need to keep.

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Definitions

A lease is an interest in land, therefore any transfer of lease will be dutiable as a transfer of land. If you are a registered self assessor and are dealing with a transfer of lease, you must self assess it in QRO Online .

Calculating transfer duty on a transfer of lease is done the same way as any other land interest transfer—the rate of duty will apply to the higher of the consideration (including GST, if applicable) paid for the transfer or the lease’s unencumbered value.

An exemption may apply in certain cases.

Assessing a transfer of lease

A transfer of lease is usually pursuant to a business contract , so you can stamp it as you would any other pursuant transfer. Find out about endorsing transactions as a self assessor .

If the transfer is not pursuant to a business contract, you will need to treat it as the primary document for the transaction and assess it in QRO Online.

Here are some tips to help you self assess this type of transaction in QRO Online.

How to lodge online

You must complete all mandatory data fields under each tab in QRO Online. Mandatory fields are marked with a red asterisk. There are some specific data requirements.

Select Transfer of non-residential land as the Transaction class . You cannot claim a home, first home or first home vacant land concession on non-residential land transactions. If the property is part non-residential and part residential (and a concession is being claimed), you must use the transaction class Transfer of residential land .
Agreement to transfer dutiable property —for transactions evidenced by an agreement
Transfer of dutiable property —for transactions evidenced by a transfer only.
Select Land in Queensland as the Type of dutiable property .
Evidence of value is generally not required for transfers of leases where there is nominal consideration.

Records you need to keep

For this type of transaction, you must keep a completed dutiable transaction statement (Form D2.2) .

Find out more about your record-keeping obligations .

Section 146 exemption

Section 146 of the Duties Act 2001 provides an exemption for the acquisition of a new right that is the lease of a dwelling (e.g. in a retirement village) or a site agreement.

Exemptions under section 146 cannot be self assessed. If you believe this exemption applies to a transaction, you must lodge the documents, including a cover letter and dutiable transaction statement (Form D2.2) , with Queensland Revenue Office for assessment.

Find out more about lodging documents for assessment .

Also consider…

Read the data entry standards for QRO Online .
Read the public ruling on dutiable transactions subject to GST (DA011.1) .
Use the transfer duty calculator to work out a transfer duty liability.
Learn about self assessing a surrender of lease .
Get help with QRO Online .
View the list of approved transactions for self assessors .

How Do You Assign or Transfer a Commercial Lease?

By Jessica Dinh Lawyer

Updated on December 15, 2023 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

1. Seek Your Landlord’s Consent

2. Deed of Assignment

3. transferring a retail lease, key takeaways.

If you lease a commercial property to operate your business, there may be situations where you need to transfer the lease. There are usually two situations when a tenant will transfer (also known as an assignment ) a commercial lease to another party (the assignee) before the end of a lease term. Namely, where the tenant is:

selling their business, and the purchaser agrees to accept the existing lease rather than enter into a new lease with the landlord; or
is proposing to exit the lease and has found a party who will take on the existing lease.

This article explains how the transfer of a commercial lease works. It also explains the critical terms of the deed of assignment from the perspective of the landlord, tenant and assignee.

1. Seek Your Landlord’s Consent

As soon as you propose an assignment as a tenant, you should:

review the existing lease to identify if the lease can be assigned;
identify the requirements of landlord’s consent upon assignment; and
correspond with the landlord or agent as to consent and approval of the proposed assignee under the lease.

When seeking your landlord’s consent for the assignment, the proposed new tenant must usually provide their financial and business references to the landlord.

Can a Landlord Refuse to Assign a Retail Lease?

If the lease is a retail lease, the landlord will not be able to withhold consent to an assignment unreasonably. The retail legislation (different in each state) provides the grounds on which the landlord can withhold their consent. These generally include the:

assignee proposes to change the permitted use;
assignee has financial resources or retailing skills that are inferior to the assignor, and
assignor has not complied with the relevant steps, per the retail legislation in that particular state, including providing a disclosure statement.

Ensure that you check the retail legislation in that particular state when carrying out an assignment.

After obtaining the landlord’s consent, a deed of consent to assignment is prepared (deed of consent).

A deed of consent is a legal document that outlines that the:

landlord confirms their consent to the transfer of lease;
tenant agrees to transfer their entire interest in the lease to the assignee from a specific date (the assignment date); and
assignee, or new tenant, agrees to assume the rights and obligations of the lease as if they were the original tenant (such as repairs, security and payment of rent and outgoings) from the assignment date. This will continue until the end of the lease term and during any option or renewal terms.

The Landlord

Generally, the landlord’s key concern is that the transfer does not affect their rights under the lease. The landlord can address this concern by ensuring that the original tenant (assignor) has complied with all of their obligations under the lease until the assignment date. The landlord will have the right to take action against the tenant after the assignment date for any existing breach of the lease.

Additionally, the landlord will want to make sure that the assignee can comply with the lease obligations. This will often involve an assessment of the assignee as a tenant. The landlord will thoroughly examine the information before confirming their consent to the transfer. This might include:

financial statements;
business history; and
professional references.

Finally, there is usually an agreement about who is liable for the costs of the deed of assignment. The landlord’s lawyer usually prepares the agreement. However, the outgoing tenant or the incoming tenant pays these costs, not the landlord.

The deed of assignment usually requires the assignee to give the relevant security and guarantees.

The Outgoing Tenant

As the outgoing tenant, your key concern is to be released from your obligations under the lease from the assignment date. The deed of assignment can address this concern by specifying that:

the tenant is released from any claims or liabilities under the lease from the assignment date (provided that there is not an existing breach of the lease); and
if the tenant has provided any security, it is to be returned or refunded.

It is important for you to remember that you are bound to the terms of the lease until the transfer of the commercial lease is formalised through the deed of assignment. Accordingly, you should continue to comply with your obligations under the lease until the assignment date.

On that note, a landlord might not agree to release you entirely from your obligations if the retail legislation in your state does not prevent this. This means that if the new tenant defaults, you could be responsible for fulfilling the lease obligations. In that case, you would need guarantees or an indemnity from the new tenant.

If the transfer of deed has to be registered, typically with retail leases, you (the assignor) usually organise the registration of the transfer, whose costs are divided with the new tenant (the assignee).

The Assignee

The new tenant’s, or the assignee’s, key concern is for the landlord to accept the transfer of the commercial lease from the assignment date. The deed of assignment can address this concern by providing that:

the landlord accepts the assignee as tenant from the assignment date;
the landlord will observe their obligations specified in the lease in favour of the assignee; and
if required in the relevant state, the parties sign a transfer of lease form and register the transfer at the land titles office.

The assignee should ensure that they have reviewed the contents of the commercial lease (including the disclosure statement if it is a retail lease). Then, they must review the lease before signing the deed of assignment. This is because the assignee will need to comply with the obligations of the tenant from the assignment date. These obligations may include the provision of security and a personal guarantee.

A personal guarantee is taken on by an individual to guarantee the obligations of another individual or entity. For example, the assignee providing may provide a personal guarantee where a particular party becomes a guarantor. If you cannot meet your obligations (such as to pay the lease), then the guarantor will have to meet that obligation themselves.

Before finalising the deed of assignment, it is important that the landlord, assignor and assignee agree on who bears the costs of preparing, negotiating and registering the deed of assignment. Generally, you, as the assignee, will bear the costs. However, you may choose to add a cap or exclude negotiation costs.

If the lease you are transferring is a retail lease, the tenant will typically need to give the assignee a disclosure statement. This statement also includes details of any changes to the disclosure statement that the landlord provided when the lease was first entered into.

The disclosure statement outlines the vital information that the assignee needs to know, including the:

current annual rent under the lease;
current estimated outgoings payable under the lease;
term of the lease and any options to renew; and
details of the premises.

Generally, the tenant may request an updated disclosure statement from the landlord before the transfer of the commercial lease. The landlord has an obligation to provide the updated disclosure statement, usually within 14 days from the date of the request.

The disclosure statement requirements differ between the states and territories. For example, in:

New South Wales, the assignee must receive the disclosure statement at least seven days before the date of the transfer; and
Victoria and Queensland, the assignee must receive the disclosure statement at least seven days before the assignor requests the landlord’s consent.

The consequences of failing to provide a disclosure statement also differ between the states and territories. For example, the assignee may:

withhold payment of rent;
seek compensation from the landlord; or
terminate the lease within a specific timeframe.

It is essential for all parties to be aware of the requirements and consequences of the disclosure statement provisions in their particular state or territory.

Additionally, transferring a lease may also lead to stamp duty implications . Stamp duty is a tax imposed on the purchase of assets and transactions of property. Therefore, if you are transferring a lease, you will commonly have to pay stamp duty. It is important that you are aware of the circumstances where you, as a tenant, will be required to pay stamp duty.

A factsheet that sets out the three ways to end a commercial lease in Australia: surrendering your lease, assigning it or subletting it.

Whether you are a landlord, tenant or assignee, it is crucial that you understand your rights and obligations when transferring a commercial lease. Further, the transfer of a retail lease leads to additional requirements and consequences related to the disclosure statement. Finally, you need to be aware of the steps you should take to ensure a smooth assignment.

If you need assistance with drafting or reviewing the terms of a deed of assignment, our experienced leasing lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page .

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