This article will discuss how to transfer a lease to someone else and provide an overview of New South Wales’ property law.
In NSW, going through the process of a lease transfer doesn’t always go smoothly. Sometimes, landlords may have specific criteria for approving new tenants. Also, there may be legal challenges that you need to deal with to ensure a smooth transition.
What does NSW’s property law say about how to transfer a lease to someone else, and how does the system work? Let’s find out.
How to Transfer a Lease to Someone Else?
Before we discuss how to transfer a lease to someone else, let us first explore the relevant NSW legislation that governs lease transfers. Each lease agreement has provisions stating whether a lessee can transfer the lease to a third party. This transaction is an ‘assignment of lease.’
In NSW, we have the following legislation:
Residential Tenancies Act 2010
The Residential Tenancies Act 2010 provides for the following provisions in relation to lease transfers:
- Section 74: This section provides that a tenant may transfer the tenancy under a residential tenancy agreement to another person or sub-let the premises to another person. However, it requires that the landlord must give a written consent to the transfer or sub-letting.
- Section 75: This section states that the landlord may withhold consent to a transfer relating to the whole tenancy or residential premises. This is regardless of whether it is reasonable to do so.
Landlords, when considering whether to consent to the transfer of a lease, will consider the proposed new Tenant’s financial position. This is to ensure that the new Tenant can meet the lease’s obligations without difficulties.
Furthermore, under the law, the landlord must not charge for giving consent to a transfer or sub-letting, other than for the reasonable expenses of giving consent.
Residential Tenancies Regulation 2019
The Residential Tenancies Regulation 2019 acts as a supporting document to the Act, providing details on other aspects of tenancy agreements but not directly addressing lease transfers.
For specific information on the transfer process, it’s best to refer to the Residential Tenancies Act 2010 (NSW), resources from organisations like the Tenants’ Union of NSW, or property lawyers who can offer guidance in going through this process.
In a transfer of lease through an agreement called ‘Deed of Consent to Assignment of Lease,’ the law requires that both the current tenant and incoming tenant sign the agreement, as well as the Landlord.
Furthermore, if either party is an incorporated company, the directors and/or director/secretary must sign in their capacity as a director and as a guarantor.
How to Transfer a Lease to Someone Else: The Process
To give you a preview of how to transfer a lease to someone else in NSW, here’s a basic checklist that you may use for reference.
Remember, this is only a general checklist. You must contact a property lawyer to help you with the legalities of lease transfers and give you more specific information as to how to transfer a lease to someone else.
- Seek the landlord’s consent. Initiate communication with your landlord and ask for their consent. Specifically, you must contact your landlord in writing. Here, you must express your desire to transfer the lease and introduce the potential new tenant(s).
- Highlight benefits. You can mention the potential benefits to the landlord, such as a smooth transition with a qualified tenant already interested.
- Negotiate. The landlord might have specific requirements for the new tenant or may request a transfer fee. Be prepared to negotiate.
- Review the new lease (if applicable). If there are changes to the original lease terms for the new tenant, carefully review and understand these before proceeding.
- Secure the transfer. If the landlord agrees, you’ll need a formal lease transfer document. This might be provided by the landlord or your real estate agent. Next, complete the paperwork and register the transfer with the Land Registry Services NSW.
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How to Transfer a Lease to Someone Else: Complications
In a transfer of lease, the new Tenant inherits the whole of the lease, including any breach by the old Tenant. For instance, if the old Tenant has not been consistent with the payment of rent or has caused damage to the property, once a lease is transferred to the new Tenant, those obligations become the new Tenant’s obligations.
Protection of the New Tenant’s Legal Interest in the Lease
Although documentation of the transfer of the lease is essential, the new tenant must register the transfer of a lease with the New South Wales Land Registry Services Office. Specifically, this aims to protect the interest of the new Tenant. Otherwise, the rights of the new Tenant under the lease may remain in jeopardy.
What if the Landlord Does not Consent?
If the agreement requires the landlord to consent or must not unreasonably withhold its consent (and does not do so), the Tenant can take the Landlord to a tribunal to force the Landlord to provide its consent.
Section 75 of the Act provides for grounds when a landlord is entitled to withhold its consent:
(a) the number of proposed occupants is more than the number permitted by the residential tenancy agreement, or
(b) the proposed tenant or sub-tenant is listed on a residential tenancy database in accordance with this Act, or
(c) the landlord is reasonably of the opinion that the transfer or sub-letting would result in the residential premises being overcrowded.
Takeaways
- A transfer of lease must contain the consent of the Landlord;
- There must be documentation of the transfer by way of written agreement;
- The transfer must be registered with the New South Wales Land Registry Services Office;
- The new Tenant must be careful about its obligations under the lease, including any breaches by the old Tenant.
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Do You Need Legal Help?
Lawyers from JB Solicitors can help in the transfer of a lease in several ways, including:
- Reviewing the lease agreement. Lawyers can review the lease agreement to ensure it contains all relevant terms and conditions, including the transfer provisions.
- Negotiating with the landlord. If the landlord is unwilling to approve the lease transfer, a lawyer can help you negotiate with them.
- Drafting the transfer documents. Once the landlord agrees to the transfer, a lawyer can draft the necessary documents.
- Resolving disputes. If there are any disputes between the landlord, tenant, and/or new tenant, a lawyer can help resolve them. They can represent you in court or through mediation and help you reach a fair and amicable resolution.
For more information about how to transfer a lease to someone else, don’t hesitate to contact our lawyers at JB Solicitors.