What is
a Lease?

A Lease is a contract between the owner, known as the landlord, and the tenant. In a Lease the owner retains ownership of the property yet transfers exclusive possession of the property to the tenant for an agreed period and on agreed terms. A Lease is a very important document because it contains the main terms of the agreement between the landlord and the tenant. It is the contract they have to live with for the term of the Lease.

A Lease is the contract which is negotiated between the landlord and the tenant and it is almost always written.  There is no standard form Lease which is universally used in New South Wales unlike the sale of land where there is a universally used Contract for Sale.   It is becoming common for Legal Practitioners in New South Wales to use the form of Lease endorsed by The Law Society of New South Wales and the Real Estate Institute of New South Wales although this Lease is not suitable for a Commercial Lease.
It is customary for the landlord’s solicitor to prepare and issue the Lease.

The law relating to Leases in New South Wales comes from three sources being the Common Law, Legislation and the principles of Equity.  The three sources of law mean that there is a lot of law in New South Wales concerning Leases.  Most of this law has been derived from English Common Law which placed importance on the ownership of land and the right for a tenant to possess and use that land. 

The Common Law includes the law of contract as well as the law which has been established by precedent decisions of the various Courts.  The Common Law relating to performance of a Contract is perhaps the most important source of the law relating to Leases.
There is also legislation which overrides or sits alongside the Common Law.  The Conveyancing Act 1919 and the Real Property Act 1900 are two important pieces of relevant legislation. The Real Property Act provides that a Lease for a term exceeding 3 years must be registered at the Land Titles Office.  Once registered, the tenant has the protection that registration affords.  A Lease must be in an approved form for it to be registrable.  The Conveyancing Act provides that a lease must be in writing to create an interest in the land.
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The law of Equity is the set of legal principles derived from the English Common Law.  The law of Equity may also override or sit alongside the Common Law. The Courts may exercise the principles of Equity when application of the Common Law would operate harshly or unjustly.

A landlord and tenant should make sure that their Lease reflects properly the rights and obligations of the parties. A well drafted Lease can save heartache in the future and be the foundation for a lasting relationship between the landlord and the tenant.