A lease is the grant of an exclusive right to the use and occupation of land or part thereof, or of a building of part thereof. A lease is made between the owner of land (Landlord / Lessor) and the person wishing to occupy the land (Tenant / Lessee). A lease must be for a specified period of time and on particular terms which will include at the very least the payment of rent.
Although a person with a freehold interest may be ‘in possession’ in that capacity through a lease to a tenant, it is the tenant, and not the freeholder, who has the ‘possession’ which the law protects against interference from strangers. For this purpose, the landlord is tantamount to a stranger because they have granted, out of the larger estate, the legal right of exclusive possession to the tenant for a term. It is the legal right of (exclusive) possession in the tenant which the law protects by remedies in actions such as ejectment and trespass.[1]
In addition to exclusive possession, most leases will incorporate either expressly or by statutory implication an obligation on the landlord not to interrupt the tenant’s quiet enjoyment. The phrase ‘quiet enjoyment’ has been found to refer to the right of a tenant to the ordinary and lawful enjoyment of the premises for their known or nominated purposes without substantial interference.[2]
Residential Leases
The Residential Tenancy and Rooming Accommodation Act (RTRAA) applies to the rental of residential properties.[3] Under the RTRAA a lessor is a person who gives another the right to occupy residential premises under a residential tenancy agreement, and a tenant is the person given that right.[4] A residential tenancy agreement is not necessarily required to be in writing and it is not required that the tenant pay rent for the provisions to apply.[5] Contracting out is prohibited and if a duty is imposed or a right is given to a lessor or a tenant under the RTRAA it is taken to be included as a term of the residential tenancy agreement.[6] Minimum housing standards are found Schedule 5A to the Residential Tenancy and Rooming Accommodation Regulation 2009.
Retail Shop Leases
The Retail Shop Leases Act 1994 defines a ‘retail shop’ as premises situated in a retail shopping centre, or used wholly or predominantly for the carrying on of a retail business.[7] The main exceptions are premises over 1,000 square metres, temporary stalls and small leases used for collateral purposes such as storage.[8] An important distinction is that the word ‘lease’ is defined to not just include a lease at common law with a right to exclusive possession, but also includes a right to occupy without exclusive possession or by way of a periodic tenancy or tenancy at will.[9] Unlike most provision in the Property Law Act, parties cannot contract out of the provisions of the Retail Shop Leases Act.[10]
Commercial Leases
In Queensland, from 30 June 2009 the prohibition on a landlord charging land tax to a tenant was abolished and a landlord is now entitled require the payment of land tax as an outgoing (for commercial leases not governed by the Retail Shop Leases Act 1994 – check). Previously, land tax was excluded from the definition of outgoings in many leases. However, in anticipation of the change to the law, many outgoings clauses were drafted in such a way that they may capture the payment of land tax as an outgoing if it ever became legal to do so. There is no retrospective application of the amendment to the legislation and therefore it only applies to leases entered into after 30 June 2009. To confirm, it does not apply to the term of an option exercised under a lease entered into before 30 June 2009.
The above is a guide to some issues which should be considered when reviewing leases. It does not apply to retail shop leases. If there is a retail shop lease to be reviewed please refer to the Retail Shop Leases Act 1994.
[1] Radaich v Smith [1959] HCA 45; (1959) 101 CLR 209, 222
[2] Byrnes v Jokona Pty Ltd [2002] FCA 41, [61]-[62].
[3] Residential Tenancy and Rooming Accommodation Act 2008 (Qld), s 10.
[4] Ibid, ss 8, 13.
[5] Ibid, s 12(3).
[6] Ibid, ss 53-54.
[7] Retail Shop Leases Act 1994 (Qld), s 5B.
[8] Ibid, s 5A.
[9] Ibid, sch.
[10] Ibid, s 16.