Don’t lose your business if the landlord goes Broke!

Don’t lose your business if the landlord goes Broke!

If you are a business that rents premises then you should urgently have a lawyer check to see if your lease is secure.

In some areas of Queensland small commercial landlords might be under strain and business owners may as a result lose their business.  Below we have set out the steps that you can take to make sure that your business is not affected. Unfortunately  many leases in Queensland are not protected as Section 66 of the Land Title Act has been ignored or forgotten.   If the landlord is put into insolvency or bankruptcy then the commercial tenants may be in serious trouble.

A bank wanting to sell business premises does not necessarily want to keep the business in place,
particularly if they believe that they can get a better deal with the tenant gone. This may be so if a buyer wants to redevelop or renovate or the buyer wants to occupy the property themselves.  Where the bank wants the tenant gone then the existing tenant may have not option but to go, if Section 66 was ignored at the time the lease was taken out.

A Bank does not have to honour a lease even if the lease is registered unless, there is compliance with Section 66.

Section 66 of the Land Title Act 1994 provides: “A lease or amendment of a lease executed after registration of a mortgage of a lot is valid against the mortgagee (the bank) only if the mortgagee consents to the lease or amendment before its registration.

This means that your lease is not safe, even if you get consent from the landlords bank. You must obtain that consent before the lease is registered.

Given the popularity of not registering leases in some parts of Queensland we suggest that tenants check to ensure that

  1. their leases are in fact registered
  2. that the landlord obtained consent to the lease from the bank
  3. that the lease was registered after the mortgagee consent was obtained

This is a serious matter. If the bank takes the premises and will not honour the lease then your business may be in real trouble.

Riba Business Lawyers

Strength Through Knowledge

Franchising, Leasing, Acquisitions

Head office:  34 Duporth Avenue Maroochydore, Sunshine Coast, Queensland.

Maroochydore:  07  54791488

Brisbane:  31032115

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