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NSW New Owners Must Honour My Commercial Lease - Is This Correct?

Discussion in 'Commercial Law Forum' started by SomeoneSomewhere, 23 October 2015.

  1. SomeoneSomewhere

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    Good afternoon all,

    I have a current commercial lease in place for my shop in a small complex of 4. The owner has recently put the complex on the market for sale. I've been told that the new owners must honour my lease at the same weekly rent and terms as set out in my contract.

    Is this correct? Can the new owners purchase the property with vacant possession? Is there anything else I should be mindful of under Commercial Law?

    Thank you in advance.
     
  2. James D. Ford - Solicitor

    James D. Ford - Solicitor Well-Known Member

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    Hi,

    Can you please tell me the term of your commercial lease (how many years)?

    Has the Lease been registered on the title to the property at the NSW land titles office?

    Does your lease contain any options to renew?

    Kind regards
     
  3. SomeoneSomewhere

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    Hi James,

    The lease is for 3 years, there's no option to renew and I don't think it's been registered with the land titles office no.
     
  4. James D. Ford - Solicitor

    James D. Ford - Solicitor Well-Known Member

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    Ok, as your Lease is for 3 years, there is no legal requirement in NSW that it MUST be registered on the title to the Property.

    Having said this, it still can be registered (at your option), but it is not necessary to protect your legal right to possession of the Property under the unregistered Lease.

    As you are in currently in possession of the Property, presumably paying rent on time, and otherwise not in default of any of the terms of the Lease, the LL cannot sell the Property with vacant possession, and any new owner of the Property must honour your rights pursuant to the Lease.

    Kind regards
     
  5. James D. Ford - Solicitor

    James D. Ford - Solicitor Well-Known Member

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    If you decide not to register your Lease, whilst your Lease remains unregistered (as the term is 3 years or less) as long as there are no fatal flaws in the Lease document itself (I recommend you have your Lease reviewed by a lawyer, if it was not prepared/reviewed by your lawyer prior to you signing it), it should be enforceable by yourself as the tenant in possession, whilst you are paying your rent on time, and not in default, for the duration of the term of the Lease, against the current LL, and any new purchasers.

    Kind regards
     
  6. GC.

    GC. Active Member

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    I'm not an expert, but I recently purchased a property in NSW with a lease in place...

    I believe that under NSW law the vendor must have a contract of sale prepared before the property is listed for sale. You should be able to request a copy of the contract from the listing agent (pretend that you're interested in purchasing... They'll possibly just email you a link to the contract, although you can expect followup phone calls.). You need to ask for the full contract (not just the front page)

    On the front page there will be tickboxes including "VACANT POSSESSION" and "subject to existing tenancies". Make sure that the contract is *not* vacant possession, and *is* subject to existing tenancies.

    Appended to the end of the contract should be copies of all the leases, possibly including the most recent condition report. If these are not appended, you should ask the agent why not.

    As I said, I'm not an expert, so I don't know how much of a guarantee this will be (especially since contracts can be modified up until they are exchanged), but it may ease your concerns if you can see the contract showing the lease. You may also be interested to see what the other tenants are paying in rent as well :)
     

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