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ARTICLE · 01 FEBRUARY 2019

Purchaser versus tenants unregistered lease

The tenant won, despite holding an unregistered lease to part of the property, which was included in the sale agreement.

AustraliaReal Estate and Construction

Ideal Business Centres Pty Ltd v Violin Holdings Pty Ltd [2018] NSWSC 1249 (9 August 2018)

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.

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