{"content":"\u003cdiv id=\"node-9\" class=\"node clear-block\"\u003e\u003ch2\u003eCommercial Lease\u003c\/h2\u003e\u003cdiv class=\"content\"\u003e\u003cdiv class=\"field field-type-text field-field-subtitle\"\u003e\n\t\t\t  \t\t\t\t\u003cdiv class=\"field-items\"\u003e\n\t\t\t              \t\t\u003cdiv class=\"field-item odd\"\u003eWhether an unregistered lease was enforceable following purchase of the property\u003c\/div\u003e\n\t\t\t              \t\u003c\/div\u003e\n\t\t\t            \u003c\/div\u003e\u003cp\u003eThe plaintiff lessee in this Western Australian case entered into a\u0026nbsp; lease of premises at Cannington with the owner.\u0026nbsp; The lease was for a term of seven years and contained an option for a further period of five years - and, depending on construction, perhaps another five year option period.\u003c\/p\u003e\u003cp\u003eThe property was sold.\u0026nbsp; Both before and at the time of the sale, a director of the purchaser received legal advice that it was not bound by the terms of the lease.\u003c\/p\u003e\u003cp\u003eThe lessee was aware of the sale of the property and its directors assumed that the purchaser as the new owner would be bound by the terms of the lease.\u0026nbsp; The lessee did not seek to register the lease or lodge a caveat to protect its interest (although it was not aware that it could take that step).\u003c\/p\u003e\u003cp\u003eShortly after completing the purchase, a director of the purchaser indicated to the agent that it did not consider that it was bound by the lease and proposed to re-let the premises at the prevailing market rental.\u0026nbsp; The agent did not immediately advise the lessee and continued to manage the property on behalf of the purchaser in accordance with its management agreement.\u003c\/p\u003e\u003cp\u003eThe purchaser wrote to the lessee purporting to terminate the lease and, upon receipt of the notice, the lessee commenced proceedings to seek a court order to confirm that the lease was still valid. The principle matter for decision which arose was whether the lease was enforceable by the lessee against the defendant under the Transfer of Land Act 1893, when the lease was for a period of more than five years and the lease contained an option provision allowing the lease to be extended in certain circumstances.\u0026nbsp; The lease had not been registered and was not protected by a caveat.\u003c\/p\u003e\u003cp\u003eThe Supreme Court of Western Australia decided that a lease for more than five years was destroyed upon the purchaser becoming the registered proprietor of the land and the lessee was not entitled to a declaration that it held a valid lease enforceable against the defendant.\u003c\/p\u003e\u003cp\u003eWhilst on taking ownership of the property, the purchaser was aware of the lease and that it could not be enforced by the lessee against the purchaser, the purchaser was not obliged to tell the lessee of this position.\u0026nbsp; The lessee argued that fraud had existed simply by the purchaser allowing the parties to proceed as if the lease was on foot. The court rejected this argument.\u003c\/p\u003e\u003c\/div\u003e\u003c\/div\u003e","type":"update"}