Alex is Sprintlaw's co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
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If your Queensland business is moving premises, selling the business, restructuring, or taking over someone else’s space, you’ll likely come across the concept of an “assignment of lease”. In practice, the assignment of lease process in QLD is one of the most common ways a commercial tenant transfers their lease to a new tenant.
This can be a great outcome for business owners. The outgoing tenant may avoid paying rent for a premises they no longer need, and the incoming tenant may step into a location that’s already fit for purpose.
But (as many business owners discover the hard way) an assignment isn’t simply “handing over the keys”. In Queensland, it usually involves the landlord’s consent, a careful review of the lease terms, and a formal deed to transfer rights and obligations. If you’re not careful, you can end up stuck with ongoing liability, unexpected costs, or delays that affect settlement dates.
Below, we’ll walk you through what an assignment is, when it makes sense, the typical steps, and the key legal issues to watch out for so you can transfer a commercial lease with confidence.
What Is An Assignment Of Lease In QLD (And When Would You Use It)?
An assignment of lease is a legal process where the current tenant (the assignor) transfers their lease to a new tenant (the assignee). After the assignment completes, the assignee becomes the tenant under the lease and takes on the tenant obligations going forward (like paying rent and complying with outgoings and use clauses).
In Queensland, assignments are used across a wide range of commercial and retail tenancies, including offices, warehouses, hospitality venues, and retail shops.
Common Scenarios Where An Assignment Makes Sense
- Selling your business: The buyer may want to keep operating from the same premises, so the lease is assigned to them as part of the transaction.
- Buying a business: If you’re buying an established business, the lease may be assigned to you at completion.
- Relocating or downsizing: You might want to exit your current lease early and assign it to someone else instead of paying out the remaining term.
- Restructuring: You may move the lease from one entity to another (for example, sole trader to company), though this depends on the lease and landlord requirements.
Assignment Vs Sublease: What’s The Difference?
Business owners often ask whether they should assign the lease or sublease it.
- Assignment: the lease is transferred to a new tenant. The new tenant deals directly with the landlord under the same lease.
- Sublease: the original tenant stays on the hook under the head lease and grants a separate sublease to a subtenant. You may still remain responsible to the landlord if the subtenant breaches.
Which option is better depends on your situation, the lease wording, and the commercial realities. If your goal is a “clean exit”, assignment is often the preferred pathway (but you need to manage the risks, especially around ongoing liability).
Do You Need The Landlord’s Consent For An Assignment Of Lease In QLD?
In most cases, yes. The majority of commercial and retail leases in Queensland include a clause that says the tenant must not assign the lease without the landlord’s written consent.
It’s important to treat this as a practical and legal requirement. If you transfer the premises or allow someone else to operate from the site without proper consent and documentation, you may be in breach of lease and exposed to serious consequences (including termination).
Can A Landlord Refuse Consent?
Whether a landlord can refuse consent (and what reasons are valid) depends on the lease terms and, for retail shop leases, the Retail Shop Leases Act 1994 (Qld). In practice, landlords will usually assess the incoming tenant’s suitability and may only refuse (or delay) consent where the lease or applicable law allows it.
Even where a landlord is open to the assignment, they will often want to:
- review the assignee’s financials and business background
- see references or a business plan (particularly for hospitality or higher-risk industries)
- request personal guarantees (especially for small businesses)
- require the assignor to rectify any existing breaches (like outstanding rent, repairs, make-good issues, or unapproved alterations)
Tip: Check The “Dealing” Clause Early
If you’re planning a business sale or relocation, one of the first things to do is review the lease clause dealing with assignments/subleases. This clause can significantly affect your timeline and your negotiating position.
Lease transfer delays are common when parties leave the consent process until late in the deal. If you’re coordinating a settlement date, you’ll want to build the landlord consent timeframe into your plan.
How The Assignment Of Lease QLD Process Usually Works (Step-By-Step)
Each transaction is a bit different, but for most Queensland businesses the assignment process follows a fairly predictable pathway.
1. Review The Lease And Your Business Deal Terms
Start by checking:
- whether the lease permits assignment and on what conditions
- any notice requirements (how and when you must notify the landlord)
- whether you must provide a deed of covenant, bank guarantee replacement, or other security
- any make-good, repair, or maintenance obligations that might be triggered
If the assignment is part of a business sale, your sale contract should also align with the lease process and timing. A mismatch here is a classic cause of last-minute disputes.
2. Request The Landlord’s Consent
The outgoing tenant typically makes a formal request, usually providing details about the incoming tenant (entity name, ABN/ACN, financials, references, and the intended use of the premises).
The landlord may also provide their “assignment pack” (their preferred forms and requirements). It’s common for landlords to have a standard process that includes legal costs payable by the tenant.
3. Negotiate Conditions And Any Side Documents
This is where many business owners get caught off guard. Even if the landlord agrees “in principle”, the consent may be conditional.
Common conditions include:
- payment of rent arrears and outgoings up to the assignment date
- fresh or replacement bank guarantee
- a director or personal guarantee from the new tenant’s directors
- evidence of insurances
- compliance with any fit-out/alterations approvals
4. Sign The Assignment Documentation
Most assignments are documented in a formal deed (often called a Deed of Assignment of Lease or similar). This is not something you want to handle on assumptions, because the deed is what sets out who is responsible for what, and from when.
Depending on the lease and the landlord, the incoming tenant may also need to sign additional documents (for example, a deed of covenant).
At this stage, it’s also a good time to check whether the business will need broader contract updates as part of the changeover (for example, updating your contract amendment approach for supplier/customer contracts if the operating entity is changing).
5. Complete And Handover
On completion, keys/access, bonds/guarantees, and responsibility for rent/outgoings are handed over according to the deed and any settlement statement.
Make sure you have clarity on:
- the exact “effective date” and time (especially if completion occurs mid-month)
- who pays what from that date
- how outgoings adjustments are calculated
- what happens to any existing security (bond/bank guarantee)
Key Legal Issues To Watch Out For When Assigning A Commercial Lease In Queensland
The QLD lease assignment process isn’t just administrative. There are several legal and commercial risk points you’ll want to manage early.
Ongoing Liability After Assignment
A major concern for outgoing tenants is: “Am I still liable after the assignment?”
The answer is lease- and transaction-specific. Depending on the lease wording, the landlord’s consent terms, and (for retail shop leases) the Retail Shop Leases Act 1994 (Qld), an outgoing tenant may be released, remain liable for certain obligations, or have liability limited to particular circumstances. This is one reason it’s worth getting the assignment deed (and any related guarantee or indemnity terms) reviewed carefully before you sign.
Make-Good, Repairs And Fit-Out Obligations
Many leases contain “make-good” clauses requiring the tenant to return the premises to a particular condition at the end of the lease.
When you assign, it’s crucial to confirm:
- whether make-good obligations are being transferred to the incoming tenant
- whether the landlord expects you to complete certain repairs before assignment
- whether any previous alterations were properly approved
In some deals, the incoming tenant takes the premises “as is” and agrees to handle make-good later. In others, the landlord insists on a fresh base-building standard, which can be expensive and time-consuming.
Guarantees And Security (Bank Guarantees/Bonds)
Landlords often require security from the incoming tenant. This may involve:
- the incoming tenant providing a new bank guarantee
- the landlord releasing the outgoing tenant’s security after completion (or after certain conditions are met)
- directors providing personal guarantees for the new tenant
If you’re the incoming tenant, you should understand what you’re signing and what personal exposure you may be taking on. If you’re the outgoing tenant, you want clear release mechanics so you’re not waiting indefinitely for your security to be returned.
Permitted Use And Exclusivity Issues
If you’re buying a business and taking over the premises, check the “permitted use” clause in the lease. It should match what you actually intend to do.
For example, if the lease only permits “retail sale of clothing”, and you intend to add services (like alterations or workshops), you may need the landlord’s agreement or a lease variation.
Also be cautious with “exclusivity” arrangements in shopping centres or multi-tenant buildings. These can be commercially valuable, but they can also limit how you operate.
What If You’re Transferring The Lease To A New Entity You Control?
Sometimes the “assignment” is internal, like moving the lease from:
- a sole trader to a company
- a partnership to a company
- one group entity to another
Even if you control both entities, the landlord may still treat this as a new tenant risk assessment and may still require guarantees and updated security.
If you’re restructuring your business, you may also be updating broader governance documents (like a Company Constitution) and signing arrangements (for example, ensuring documents are executed correctly under section 127 if you’re operating through a company).
What Documents Are Typically Involved In A Lease Assignment?
Even though every landlord has their preferences, there are a few documents that commonly appear in an assignment of lease in QLD.
- Deed of Assignment of Lease: the main document transferring rights and obligations from the outgoing tenant to the incoming tenant.
- Landlord’s Written Consent: evidence the landlord has consented to the assignment (often included within the deed or as a separate letter/notice).
- Deed of Covenant (or similar): a document where the incoming tenant agrees directly with the landlord to comply with the lease terms.
- Guarantee and Indemnity: sometimes directors or related parties guarantee the incoming tenant’s obligations.
- Disclosure/Information Documents (in some cases): especially for retail tenancies, landlords may require certain information to be provided as part of the process.
- Settlement Adjustment Statement: sets out rent/outgoings adjustments and how amounts are apportioned between parties.
If the lease assignment is part of a broader transaction (like a business sale), there may be additional documents around the sale itself. For example, a buyer and seller might also need to consider due diligence and transaction documents, which often sit alongside the lease transfer.
Where you’re dealing with a property right or a more flexible occupation arrangement (like shared spaces), it may also be worth checking whether the arrangement is actually a lease or closer to a Property Licence Agreement.
Key Takeaways
- The assignment of lease process in QLD lets you transfer a commercial lease to a new tenant, but it’s not as simple as handing over keys.
- Most Queensland leases require the landlord’s written consent before an assignment can go ahead, and landlords often impose conditions (financial checks, security, guarantees, and legal costs).
- A well-drafted Deed of Assignment is crucial to clarify the effective date, rent/outgoings adjustments, and who is responsible for what after completion.
- Outgoing tenants should watch for ongoing liability risks (which depend on the lease and, for retail shop leases, the Retail Shop Leases Act 1994 (Qld)), while incoming tenants should check permitted use, make-good obligations, and any guarantee requirements.
- If the assignment is linked to a business sale, it’s important to align the lease consent process with settlement timing to avoid delays and disputes.
If you’d like help with an assignment of lease in QLD, including reviewing the lease and drafting or negotiating the transfer documents, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
