Assignment of Retail Lease in NSW

How assignment works

An assignment of a retail lease in NSW transfers the tenant’s lease to someone else, usually the buyer of the business. Most leases need the landlord’s consent. The Retail Leases Act 1994 (NSW) sets the steps for asking for consent and limits when the landlord can refuse.

The consent request and assignor’s disclosure

The outgoing tenant (the assignor) asks the landlord for consent in writing. It gives the landlord the information it reasonably needs about the buyer, such as financial details and retailing experience. It also gives the buyer an updated lessor’s disclosure statement: the original statement plus any changes since.

The assignor should also give the buyer an assignor’s disclosure statement in the prescribed form, with a copy to the landlord. It tells the buyer about the lease and the premises, including matters the assignor knows of that the buyer should be aware of. It is often given with the consent request, and it must reach the buyer at least 7 days before the assignment for the release below to apply. If you are the buyer, we can review the lease and the assignor’s disclosure statement before you commit.

Timeframes for the landlord

The Act sets a period for the landlord to respond once it has the request and the information. If the landlord doesn’t consent or refuse within that period, generally 28 days, it may be taken to have consented. Asking for further information can affect the timing, so a complete request at the start helps.

When a landlord can refuse consent

The landlord may withhold consent only on limited grounds, including where:

• the buyer proposes to change the use of the premises
• the buyer’s financial resources or retailing skills are not as good as the outgoing tenant’s
• the tenant has not followed the consent process

Release of the assignor and guarantors

The assignor and its guarantors are generally released from liability for breaches of the lease after the assignment if, at least 7 days before the assignment, the assignor gives the buyer an updated lessor’s disclosure statement and an assignor’s disclosure statement, and gives the landlord a copy of the assignor’s statement. If these steps weren’t followed, or the statement was materially false or misleading, the release may not apply.

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