Leasing and Property Newsletter – February 2019
In this edition our team report on the following topics:
- Can a tenant exercise an option to renew a lease verbally?
- The NSW Tribunal has found a landlord’s demolition notice was invalid because the landlord served it so as to replace the tenant with a ‘better’ tenant: and
- When can an unregistered lease bind a purchaser of land?
The Tenant verbally exercised an option to renew a lease of premises with the Initial Landlord. The premises was sold to the Current Landlord on 13 May 2016 (after the expiry of the Lease). The Tenant claims the Current Landlord is estopped from denying that she validly exercised the option
Invalid Demolition Notice
MJHQ Pty Limited v Wynne Ave Pty Ltd  NSWCATCD 61
One of the most controversial and expensive topics in Retail leasing has come before the NSW Tribunal again – demolition notices. In this case, the Tribunal found that the landlord was using the demolition clause to terminate the lease so as to grant a lease to a new tenant. This did not amount to a ‘genuine proposal’, as required by the Retail Legislation, and the Tribunal declared that the demolition notice was invalid.
Purchaser verses unregistered lease
The Vendor of a commercial property, part of which was leased to a tenant, entered into a sale agreement with the Purchaser. The lease term was for 10 years but it was not registered. On completion of the sale, the Purchaser required the Tenant to vacate on the basis that:
“As the Unregistered lease was not registered on the title of the land and is for a term in excess of 3 years, the owner is not bound by the terms of unregistered lease pursuant to s42(1)(d) of the Real Property Act 1900 (NSW).”
They argued that failure to register the lease meant the Tenant did not have indefeasible title and therefore the Purchaser was not bound by the lease. The Purchaser suggested that the Tenant was merely in occupation as a tenant at will.
The Supreme Court held that the Tenant had the benefit of an in personam equity against the Purchaser which overcomes what would otherwise be the Purchaser’s indefeasible title to the property under Section 42 Real Property Act. The Tenant won.