The short answer
Buying a business does not automatically give the buyer the right to occupy its premises. The business sale contract and the lease assignment are separate legal steps.
Where the lease requires landlord consent, the parties must coordinate:
- the business sale contract;
- the consent request and supporting information;
- any retail shop lease disclosures;
- the assignment deed or new lease;
- replacement security and guarantees;
- release of the outgoing tenant and guarantors; and
- the business settlement date.
If those steps are not aligned, a buyer can acquire business assets and goodwill without securing the expected premises rights, while a seller can complete the sale but remain exposed under the lease.
Start by classifying the lease
The first question is whether the lease is a retail shop lease governed by the Retail Shop Leases Act 1994 (Qld) or another commercial lease.
Retail status affects disclosure documents, advice reports, dispute pathways and potential release of the outgoing tenant and guarantors. It should not be decided only from the tenant’s business name or the heading on the lease.
Review:
- the premises and retail shopping centre status;
- the permitted use and actual business;
- statutory exclusions;
- the lease date and term;
- assignments and variations; and
- any approved disclosure forms already exchanged.
What section 142 of the Property Law Act does
If a lease requires landlord consent before an assignment or another specified dealing, section 142 of the Property Law Act 2023 (Qld) provides an important process.
The tenant can give the landlord a proposal notice with full particulars. The landlord must not unreasonably withhold consent, and that protection cannot be excluded by contrary lease wording.
The landlord may request further information. Once full particulars have been received, the landlord generally has one month to give a decision notice stating:
- consent and any conditions;
- refusal and the reasons; or
- another decision permitted by the legislation.
The one-month period can be extended by agreement made within that period.
What counts as full particulars?
There is no single document pack suitable for every assignment. A landlord commonly asks for information about:
- the proposed assignee’s identity and corporate structure;
- business experience;
- financial statements and references;
- business plan and permitted use;
- directors, trustees and beneficial owners;
- proposed guarantors;
- bank guarantee or cash security;
- licences and approvals; and
- the proposed assignment date.
An incomplete first email may not start the statutory month. The tenant should provide a coordinated pack and ask the landlord to confirm when full particulars are considered received.
No response does not mean deemed consent
If the landlord does not respond within the statutory period, the tenant should not assume consent.
Section 142 provides a court pathway concerning failure to give a decision notice, unreasonable refusal or unreasonable conditions. Retail tenancy disputes can involve a different statutory dispute process.
Until the position is resolved, the buyer should not take possession or operate on the assumption that silence transfers the lease.
What does the buyer receive on assignment?
Under section 143, an assignee generally takes the benefit and burden of the existing lease terms to the extent the outgoing tenant held them immediately before assignment.
An assignment does not automatically create:
- a fresh lease term;
- a new option;
- a clean rent account;
- a new permitted use;
- removal of repair or make-good obligations; or
- release from existing defaults.
Personal terms, express exclusions, accrued rights and liabilities and any contrary agreement must be reviewed.
The buyer should check the complete lease chain, including variations, options, rent reviews, outgoings, incentives, side deeds and prior assignments.
Assignment or new lease?
A buyer may prefer a new lease instead of taking the existing lease, but the landlord is not automatically required to offer one.
Compare:
- remaining term and options;
- rent and review structure;
- permitted use;
- incentives;
- security;
- make-good obligations;
- registration; and
- personal guarantees.
A new lease can solve some historical issues but may also reset commercial terms or remove a valuable option.
Retail shop lease disclosure timing
For a retail shop lease assignment, sections 22B to 22D create specific disclosure and advice requirements.
The assignor’s disclosure timing can be linked to the earlier of the business sale agreement and the consent request, with a minimum period generally applying unless a valid statutory process changes it. The landlord and assignee also have disclosure obligations, and a non-major assignee may need legal and financial advice reports.
Use the current approved Queensland forms and retain evidence of delivery. Late or defective disclosure can affect the transaction and the outgoing party’s release.
Is the outgoing tenant released?
Do not assume that landlord consent automatically releases the seller or its guarantors.
For a general commercial lease, section 144 provides a specific release after a subsequent assignment: where the original tenant assigns to a first assignee and that assignee later assigns to another person, the original tenant and guarantor are released from liability for a breach by the subsequent assignee. Transitional rules and accrued liabilities must be checked.
For a retail shop lease, section 50A can release the assignor and its guarantor from liability resulting from a default by the assignee if the statutory disclosure requirements are satisfied and the assignor’s statement is not materially incomplete, false or misleading.
These statutory releases are not interchangeable. The safest transaction documentation should expressly identify:
- pre-assignment liability;
- post-assignment liability;
- release of the outgoing tenant;
- release of each named guarantor;
- treatment of existing default; and
- any continuing indemnity.
Bank guarantees, cash bonds and personal guarantees
Replacing security is separate from obtaining consent and release.
The assignment deed should state:
- when replacement security must be delivered;
- whether the outgoing bank guarantee will be returned;
- who holds any cash bond;
- the effective date of the new guarantee;
- whether the outgoing guarantor is expressly released; and
- what happens to claims relating to earlier defaults.
An email saying the assignment is “approved” may not deal with these points.
Aligning business settlement with lease completion
The business sale contract should address lease completion as a condition or settlement deliverable.
Depending on the transaction, consider:
- a condition for landlord consent in acceptable form;
- a condition for an agreed assignment deed or new lease;
- retail disclosure deadlines;
- replacement security;
- express release;
- a long-stop date;
- consequences if consent is refused or delayed;
- possession and trading arrangements; and
- apportionment of rent, outgoings and bond.
Settlement should not be scheduled on an assumption that the landlord’s one-month decision period begins with the first informal contact.
Pre-settlement checklist
Before completing the business sale:
- Review the business sale contract and complete lease chain.
- Confirm retail or non-retail status.
- Identify the lease consent clause.
- Submit full particulars and record receipt.
- Coordinate statutory retail disclosures where applicable.
- Negotiate the assignment deed or new lease.
- Confirm term, options, permitted use and existing defaults.
- Replace bank, cash and personal security.
- Obtain express releases for the seller and guarantors.
- Align effective date, possession and business settlement.
Frequently asked questions
Can the landlord refuse an assignment?
The landlord can decide the request, but section 142 generally prevents unreasonable withholding of consent where it applies. Reasonableness depends on the lease, proposal and evidence provided.
How long does the landlord have?
Generally one month after receiving full particulars, subject to any valid agreed extension. The first incomplete email may not start the period.
Does silence mean consent?
No. The Act provides a legal pathway; it does not create automatic deemed consent.
Does assignment give the buyer a new lease?
No. The buyer generally takes the existing lease terms. A new lease must be separately negotiated.
Is the seller released after assignment?
Not automatically. Retail status, disclosure compliance, lease date, assignment chain, accrued defaults and deed wording all matter.
Do all commercial leases require seven-day assignment forms?
No. The retail shop lease disclosure regime applies only where the legislation covers the lease.
How Ensure Legal can assist
Ensure Legal can review the business sale contract, lease, landlord consent pack, retail disclosure documents, assignment deed, security and release together before settlement.
If settlement is approaching and consent or release remains unresolved, obtain advice before completing the business sale.
Important information
This article provides general information only and is not legal advice. Retail status, consent, release and completion mechanics depend on the documents, dates and transaction.
