Recent changes to the Land Act look to streamline some of the processes associated with transferring a lease and will mean some leaseholders will be exempt from requiring a Transfer Approval.

So, what exactly has changed?

 Until recently, when transferring a leasehold interest (“Lease”) under the provisions of the Land Act 1994 Qld (the “Act”), the holder of the Lease (“Leaseholder”) was obliged to apply to the chief executive of the Department of Natural Resources, Mines and Energy for approval to the transfer of a lease (the “Transfer Approval”) prior to lodging the Form 1 Transfer with the Titles Office Registry.

New section 322AA of the Act (which commenced on 2 December 2019) allows the chief executive to exempt certain persons from the Transfer Approval requirement, including the Leaseholders of certain types of Leases.  

The chief executive has provided notice that a Leaseholder who has a Lease that satisfies certain criteria will be exempt from the Transfer Approval requirement.

Who is exempt? 

To be exempt the Lease (the “Exempt Leases”) must be one of the following:

• Primary production Lease in rental category 11 (“Category 11 Leases”);
• Residential lease in rental category 12 (“Category 12 Leases”); or
• Business and government core business lease in rental category 13 (“Category 13 Leases”).

Category 11 Leases cover leases, licences and permits to occupy whose use is primarily for primary production. Primary production covers aquaculture, viticulture and agriculture (including growing cane, coffee, tea, tobacco, fruit, vegetables, flowers and other horticultural crops, and farming of cattle, pigs and poultry).

Category 12 Lease cover leases, licences and permits to occupy whose use is primarily residential.

Category 13 Lease cover leases, licences and permits to occupy used for business, tourism, commercial and industrial purposes that do not meet the requirements of another category.  The category also covers tenures held by government leasing entities when the use of the land is essential for the conduct of their core business (e.g. operating hospitals, police stations, schools, offices and depots).

Even though a Lease may fall within one of these categories, the Lease will not be exempt if:

• It is issued for significant development and requires a financial and managerial capability assessment; or
• Is otherwise subject to:
  • A performance guarantee bond;
  • Deed of indemnity;
  • Mortgagee in possession; or
  • Sale by mortgagee exercising power of sale or have an appointed receiver/manager.

All Exempt Leases will now include an administrative advice noting the exemption recorded on them.  The administrative advice will be recorded as an “EXEMPT CON”.

So, what does this mean for Leaseholders of Exempt Leases?

Generally, contracts for the transfer of Leases are subject to:

• The chief executive giving written approval to the transfer of the Lease, which may include certain terms and conditions;
• The approval being given on terms and conditions acceptable to the parties to the contract; and
• The lodgement of the transfer being accompanied by a statutory declaration by the incoming Leaseholder stating that it is aware of the condition of the land being transferred and of the various conditions attaching to the Lease or the land.

Specifically, the REIQ Contract for Commercial Land and Buildings (Eight Edition) provides that if any consent is required by statute for the transfer of a Lease, that the contract is subject to such consent being given and that if the consent is refused or not granted by the Settlement Date, then either party may terminate the Contract.

Exempt Leases will no longer fall within this category with the following outcomes for Leaseholders of Exempt Leases:

• Contracts for the transfer of Exempt Leases will no longer need to be subject to obtaining the consent of the chief executive; 
• Applications for exemption to the transfer of Exempt Leases will no longer have to be made.

How will this help?

This ultimately means a significant streamlining of processes associated with the transfer of Exempt Leases resulting in:

• Increased certainty of settlement of contracts for the transfer of Exempt Leases;
• Decreased costs for each party, as applications for consents are no longer required; and
• Potentially decreased time frames for settlement of contracts for the transfer of Exempt Leases, as provision no longer needs to be made for the application and approval processes.

If this affects you, or if you aren’t sure, get in touch with us now on 07 3220 1144 or email me at daniel@hillhouse.com.au to discuss your circumstances.