NSW Consequences of assigning or transferring lease

Discussion in 'Property Law Forum' started by GC., 26 August 2019.

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  1. GC.

    GC. Well-Known Member

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    Regarding a property (small block of units) headleased to the state government who then sub-lease out as social housing, the gov't have asked for new conditions in the headlease where they "can assign or transfer this lease without consent to any social housing provider as defined in section 136 of the Residential Tenancies Act 2010"

    I have had a look in the NSW residential tenancies act for "transfer" and "assign", and there is very little there except for a couple of sections around landlords approval (which are moot if we agree to the proposed clause).

    We currently have only buildings insurance and have not taken out landlords insurance, figuring that the state gov't would always be available to sue if they failed to pay rent or did not repair any tenant damage. (we are aware that this leaves us without coverage for some internal fittings, so there is some informed risk involved). As a result, we are concerned about coverage if we stop having the state government being liable for tenant issues with our property.

    Regarding transferring or assigning leases, I have some questions...
    1) Is there any legal difference between "transfer" or "assign", given that they have explicitly listed both?
    2) Does the gov't still have liability for the lease after transfer or assignment if...
    a) The new entity later becomes insolvent
    b) There was tenant damage to the premises prior to the transfer or assignment that is not picked up until later.
    3) Does the new entity have liability for issues introduced by tenants prior to the transfer or assignment. For example where defective work (that was not authorised by us) was carried out on the driveway that can cause damage to sub-tenants cars. (I will have this specific issue resolved at my own expense just to save the hassle, but using it as an example).
    4) If there is a dispute, how do I identify which entity is responsible for rent? Does the ledger just carry on and ignore the change in entity (with the new entity responsible for whatever is outstanding), or do I need to reconcile the "before" with the gov't, and the "after" with the new entity?
    5) There are some damages and alterations to units which would be required to be rectified when sub tenants move out, do I need to get these reverted to their previous state before the changeover, or are we still entitled to expect the new entity to revert these?
    6) Is it possible to do this assignment without us actually knowing? The clause they are asking for makes no mention of informing us of the change.

    This tenancy is quite "interesting" as we purchased the units with the tenants in place (our conveyancing solicitor told us that we retained all the rights that the vendor had as a landlord). Whilst I have fairly thorough documentation as to what we agreed to since purchase, there is very poor documentation from prior to that as the previous owner hadn't kept records, and the gov't has been unable to check any documentation when issues have arisen (we have been able to resolve everything amicably, so far). One unit has a patio out the back that pre-dates the current sub-tenant, but is not on the plans and is built across an easement that we are not supposed to build on.
     
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