Do Leases need to be Registered?
The short answer is whilst it is not mandatory, it is highly recommended.
Lease registration allows for a tenant to note their interests in the lease on the title of the land. This can be useful, as registration allows for anyone to see the existence of the lease when searching the land title. The law in Queensland does not require mandatory registration of leases (as outlined in section 74 of the Land Title Act 1994), but it can be advantageous for a multitude of reasons to register one’s lease. It is especially important to consider registration if the lease has exceeded a duration of three years (or will exceed that duration with options).
How does the law protect my interest?
Registration is particularly useful in circumstances of a lease existing for more than three years, as at this point, there is no longer any automatic legal protection. When a lease is under three years in length, then clients are provided with a protection known as ‘indefeasibility in title’, which means that they have the strongest legal interest in the premises. When the law no longer serves to protect your interest in the lease after three years has passed, registration will serve as an official notation of your interest in the land, as authorized in section 64 of the Land Title Act 1994.
What are the advantages to registering a lease?
While your lease may not be rendered contractually invalid once it has exceeded three years, it does not have to be honoured by any subsequent purchasers of the land or a mortgagee of the lessor. With registration, there is an almost certainty that the lease will be honoured by all of those who may have a later interest in the land. This process also serves to assist not only the tenant, but the landlord.
While the tenant’s rights are obviously protected if the property is to be sold or impacted by any other alteration (such as in the event of a mortgagee taking possession), the registration can also add value to a property. Purchasers generally find already tenanted commercial property to be an attractive prospect. Furthermore, registration of a lease can provide a landlord with extra security, as their financier will be impressed by the stability present in the land they own.
How do I register my lease?
Registering a lease is not compulsory, but as explained, it can help to avoid legal issues if the property you are leasing is sold or subject to a mortgagee. It is highly recommended that you register your lease if you have been a tenant for more than three years and if you are a landlord, it is also recommended that you encourage long-term tenants to undertake this process. They can lodge their registration with the Department of Natural Resources, Mines and Energy and will usually be required to pay a lodgement fee. If there is a mortgage on title, they should obtain the consent of the mortgagee to further protect themselves and bind the mortgagee to the terms of the lease.
If you have any further questions regarding lease registration in Queensland or need assistance in registering your lease, please do not hesitate to contact us.
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