As a landlord entering into a commercial lease, it is imperative that you balance up whether you must register your lease with the NSW Land Registry Services.
We have set out below the key considerations when considering whether to register your lease.
Retail Leases Act
The first consideration is whether the Retail Leases Act applies.
A list of businesses that are covered by the Retail Leases Act are listed in schedule 1, and include but are not limited to:
- Beauty Therapists
- Department Stores
- Fast Food Shops
- Travel agencies
If the Retail Leases Act applies to the tenant’s business, the next consideration is whether the lease has a term of more than 3 years. If it does, then the lease must be registered within 3 months of the lease being signed. The 3-year term threshold includes any option periods under the lease. For example, if the lease has a term of 2 years, but includes an option period for a further 2 years, the total term is considered to be 4 years, and therefore it must be registered.
If the Retail Leases Act does not apply, there is generally no legal requirement to register it. However, it is good practice to do so, as it ensures that the tenant’s interest in the property is protected if the property is sold during the tenancy, and it ensures that there is a fully executed version of the lease that can be obtained by either party if a copy if lost. As a rule of thumb, if the lease term, including any options, is 3 or more years, it should be registered.
Once a lease is registered, if the parties want to extend the term of the lease, amend the rent amount, or otherwise vary the terms of the lease, then a variation of lease can, and should be registered with the NSW Land Registry Services. This must be done before the current lease expires, and both parties must consent to any variation of the lease before it can be registered.
Leases or Variations of Lease dated before 1 January 2008 incur stamp duty, as well as any leases in which a lump sum is payable as opposed to periodic rental and other payments.
Leases or Variations of Lease dated after 1 January 2008 do not attract stamp duty.
Our expert property and commercial law team has extensive leasing experience, acting for both landlords and tenants across the residential, commercial, and industrial sectors.