29 Jan 2026
Words David Adolphe Informer

The Need to Register Leases

With the increased use of electronic settlements of sales of leasehold motels and caravan parks where a new lease is lodged for registration on settlement, it is important to consider these issues prior to settlement.

The Legal Effect of Registration

The lease creates contractual rights and obligations between landlord and tenant. The lease also grants the tenant an interest in the land.

For leases shorter than three years, all states and territories of Australia have legislation which automatically grants a legal estate for a tenant without registration of the lease on title. However, for leases which are longer than three years the tenant will only be granted an equitable estate unless the lease is registered, in which case the tenant obtains a legal estate (see Victorian exception below).

The difference between an equitable estate and legal estate is that with an equitable estate the tenant will have more limited rights to enforce against a purchaser or other party that may have a subsequent interest in the land.

In all three states, leases for terms exceeding three years (including options) should be registered to ensure that the tenant’s interest “runs with the land.” An unregistered long-term lease generally creates only an equitable interest, which may not bind a purchaser or mortgagee of the land.

Queensland and New South Wales

In both states, a lease for a term (including options) exceeding three years must be registered to operate as a legal estate.

Registration is achieved by lodging a lease in the approved form with the relevant land registry. In Queensland, leases are registered using the Titles Queensland elodgement service. In New South Wales, leases are registered using PEXA.

Victoria

Victoria is often viewed as an exception to the general requirement to register long leases because legislation in that state provides that the interest of a registered proprietor of land will be free from all encumbrances except (among other things) the interest of a tenant in possession of the land.

This means that a tenant’s interest will be protected against a subsequent registered owner of the land regardless of the length of the lease.

However, this exception will not cover any grant of an option to purchase the land which will not be protected and therefore not enforceable against a subsequent registered proprietor.

Victorian legislation does permit registration of leases exceeding three years and registration is recommended to ensure an option to purchase the land, a common feature of a motel or caravan park lease, is protected. Registration will also give notice to any potential freehold purchasers or mortgagees of the tenant’s interest and provide a basis for a transfer of the interest to a leasehold purchaser.

Mortgagee Consent

Where the land is subject to a registered mortgage, consent of the mortgagee to the lease must be obtained before the lease is registered on title. Failure to obtain mortgagee consent before registration may result in a mortgagee in possession of the land not being bound by the lease and selling the land with vacant possession meaning the tenant may lose their business.

This requirement also applies to amendments and variations to leases — such as term extensions, rent variations or changes of use — since each alters the mortgagee’s security.

Practical Implications

Registration of leases enhances certainty, transparency and marketability of leasehold businesses. They allow purchasers and financiers to verify lease terms through a title search, reducing the risk of dispute and supporting efficient property transactions.

Registered leases also provide a means for lenders to take security over a lease by registering a mortgage of the lease. For tenants, registration ensures security of tenure and continuity of business even if the property changes hands. For landlords, compliance with registration and consent obligations maintains lender confidence and preserves property value.

Parties to a sale and purchase of motels and caravan parks with grants of new leases or amendments to a lease increasing the term or granting further options should take steps early to obtain mortgagee consent and be ready for registration on settlement. END