Definition: Commercial Conveyancing & Lease Liability
Commercial Conveyancing (QLD) involves the transfer of legal title or interests in commercial property, including the drafting and assignment of leases. A critical component is Lease Assignment Liability—the extent to which an original tenant (assignor) remains financially responsible if the new tenant (assignee) defaults. The Property Law Act 2023 has fundamentally altered these rules for 2025/2026.
For decades, commercial landlords across Queensland—from Brisbane to the Gold Coast—enjoyed a powerful safety net—one that many high-net-worth investors took for granted. It was the ability to keep an original tenant (and their guarantor) “on the hook” indefinitely, even after the business had been sold and the lease assigned multiple times.
This “chain of liability” meant that if you leased a warehouse to Tenant A, who sold their business to Tenant B, who then sold to Tenant C, you could often still pursue Tenant A if Tenant C stopped paying rent. It was a liability loophole that favored the landlord, providing layers of financial security.
As of August 1, 2025, that loophole has effectively closed.
With the introduction of the Property Law Act 2023, the rules of commercial conveyancing in QLD have shifted. For sophisticated investors and landlords, this change demands a complete rethink of how you assess incoming tenants. If you treat a lease assignment as a mere administrative “rubber stamp” in 2026, you could be exposing your rental yield to unprotected risk.
The Big Change: Section 144 and the End of “Forever Liability”
The most critical update for commercial landlords falls under the new provisions regarding the assignment of leases.
The Old Rules (Pre-August 2025)
Under the old Property Law Act 1974, the common law principle of “privity of contract” often prevailed. Unless a lease specifically stated otherwise (or was a Retail Shop Lease with specific disclosure protections), a landlord could theoretically hold the original tenant liable for the duration of the lease term, regardless of how many times it was assigned. This provided a “guarantor stack” that secured the property’s income stream.
The New Rules (Post-August 2025)
The Property Law Act 2023 (which fully commenced on August 1, 2025) introduced a statutory release mechanism in Section 144.
Here is the new reality: If a tenant (Assignor) assigns their lease to a new tenant (Assignee), and that Assignee subsequently assigns the lease to a third party, the original tenant and their guarantors are now statutorily released from liability.
While this sounds technical, the financial implication is massive. You can no longer rely on the strength of the original covenant once the lease has changed hands a second time. The “chain” is broken by law.
Why This Matters for Your Bottom Line
For investors, the value of a commercial asset is directly tied to the security of its income. The “Liability Loophole” allowed landlords to be somewhat lenient when approving a lease assignment because they knew the original, strong tenant was still a backstop.
That safety net is gone.
If you approve an assignment to a weak operator (“Tenant B”), and Tenant B flips the lease to a $2 company (“Tenant C”) and then vanishes, you cannot go back to your original “Blue Chip” Tenant A. You are left with Tenant C and whatever flimsy security bond they provided.
The “Unreasonable Withholding” Trap
To make matters more complex, the new Act also tightens the rules on landlord consent. You cannot simply refuse an assignment to protect your position without valid grounds.
- Decision Notices: You must provide a formal “Decision Notice” within one month of receiving a request to assign.
- Reasonableness: You cannot “unreasonably withhold” consent.
- Consequence: If you delay or refuse without a solid legal reason, the tenant can apply to the Court for an order forcing the assignment—and potentially sticking you with the legal costs.
Strategic Defense: How to Protect Your Yields in 2026
At Spot On Conveyancing, we are advising our landlord clients to adopt a “Forensic Approval Process” for all new leases and assignments.
1. Front-Load Your Security
Since you can no longer rely on the “chain of liability” long-term, the security (Bank Guarantee or Security Bond) provided by the incoming tenant is paramount.
➔ Action: Negotiate higher security bonds for assignments. If the risk profile changes, your security must increase to match it.
2. The “Deed of Consent” is Your New Best Friend
Never rely on a simple email exchange to approve an assignment. You need a robust Deed of Consent to Assignment.
➔ Action: This deed must explicitly outline the obligations of the incoming tenant and, where legally permissible, reaffirm specific indemnities. It is your primary tool to vet the financial health of the incoming tenant before the assignment is finalized.
3. Strict Financial Vetting
Do not accept a “Letter from the Accountant” as proof of funds.
➔ Action: Demand comprehensive P&Ls, asset statements, and trading history. If the incoming tenant is a new Shell Company, require personal guarantees from the directors. Remember, once the lease moves on from them, your recourse against the original tenant evaporates.
Pros & Cons of the Property Law Act 2023 Changes
| Pros (For Tenants & Business Sellers) | Cons (For Landlords & Investors) |
|---|---|
| 1. Certainty of Exit: Business owners can sell and eventually sleep easy knowing they aren’t liable forever. | 1. Loss of Security: The “Guarantor Stack” is removed upon subsequent assignments. |
| 2. Faster Approvals: Landlords are now on a statutory clock (1 month) to make decisions. | 2. Higher Admin Burden: Strict requirements for “Decision Notices” and “Proposal Notices.” |
| 3. Fairness: Prevents landlords from blocking business sales unreasonably. | 3. Litigation Risk: Silence or delay can now lead to court orders against the landlord. |
| 4. Clarity: Standardized rules replace vague common law precedents. | 4. Vetting Costs: Landlords must spend more on due diligence for every single assignment. |
Conclusion: Don’t Let the New Laws Dilute Your Asset
The closure of the “Liability Loophole” in 2025 signals a new era for commercial conveyancing in QLD. The days of passive rent collection are over. Landlords must be proactive, legally sharp, and diligent in their paperwork.
While the Property Law Act 2023 aims to modernize the sector, it shifts significant risk onto the property owner. Your best defense is a flawlessly drafted lease and a conveyancing team that understands how to navigate these new statutory tightropes.
Protect your rental yields. Don’t leave your asset security to chance.
Contact Spot On Conveyancing today for a strategic lease review.About the Author
Ana Nicholas is a Director and Commercial Conveyancing Solicitor at Spot On Conveyancing. With over 15 years of experience in the Queensland legal property sector, Ana specializes in high-value commercial transactions, lease negotiations, and complex land subdivisions. She is passionate about helping investors navigate the shifting legal landscape to maximize their property potential.