Showing posts with label Leasing. Show all posts
Showing posts with label Leasing. Show all posts

Tuesday, 5 May 2020

Government landlords - what the new COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 mean for you

The COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 were made on Friday 1 May 2020, with retrospective effect from 29 March 2020.  The regulations apply to the State and its agencies when it is acting as a landlord or a licensor.

The most relevant aspects of the regulations in your context are as follows:

The regulations apply when all of the following criteria are met:

  1. The agreement is a commercial lease or licence, including a retail lease and was in effect on 29 March 2020; and
  2. The tenant is a SME entity as defined in the Commonwealth's Jobkeeper scheme and is a participant in this scheme.

Landlords are prevented from:

  1. evicting the tenant, re-entering or recovering possession of the premises, or otherwise drawing on the tenant's security for performance (eg, security deposit, bank guarantee, etc) if the tenant does not pay rent or changes their trading hours in certain circumstances during the period between 29 March and 29 September 2020.  (The landlord can continue to exercise its enforcement rig for other breach types); or   
  2. increasing the base rent between 29 March and 29 September 2020, unless the parties agree otherwise in writing.

If a landlord receives the benefit of a reduction in a third party outgoing (e.g. electricity rates, land tax), it cannot charge the tenant more than the tenant's proportionate share of the reduced outgoing payable and must reimburse the tenant for excess monies already paid.

Tenants initiate the rent relief process.  The landlord must respond within 14 days unless the tenant agrees to a longer time period.  The landlord's offer must conform with the requirements specified at regulation 10(4).  If the tenant's financial circumstances materially change later on, the tenant can make a further request restarting the process.

For any rent deferred under the agreed rent relief arrangements, the landlord must:

  1. not charge interest or other charges on the deferred rent;
  2. offer to extend the lease term by the deferral period on the same terms and conditions;
  3. allow the deferred rent to be amortised over the greater of 24 months or the rest of the term; and
  4. delay payment of the deferred rent until the earlier of 30 September 2020 and term expiry (not including any deferred rent extension).

If a tenant cannot operate their business at the premises at any time between 29 March to 29 September 2020, a landlord must consider waiving outgoings and other expense recovery rights.  In turn, landlords can reasonably cease or reduce provision of services at the premises during this disruption period.

If there is a dispute, either party can refer the dispute to the Victorian Small Business Commission (VSBC). Before a party can commence proceedings in VCAT or a court (other than the Supreme Court), that party needs a certificate from VSBC that mediation has failed or is unlikely to resolve the dispute.

Landlords and tenants have a general obligation to cooperate and act reasonably and in good faith in all associated discussions and actions.

The Regulations override anything to the contrary in the terms of an eligible lease and modify existing legislation and common law.

We recommend developing your internal processes and negotiation strategy now for meeting your landlord obligations, in readiness for receipt of rent relief requests.  We are happy to assist Victorian public entities with this.

The VGSO Property Team provide a full-service property law and Crown land practice to all aspects of the Victorian public sector.  In particular, the Property Team can assist with drafting and negotiating deeds of variation and side agreements for delivering rent relief, and provide advice on application of the Regulations to your leasing portfolio.  

To find out more, contact:

Margaret Marotti
Managing Principal Solicitor
Victorian Government Solicitor's Office

Anthony Leggiero
Managing Principal Solicitor
Victorian Government Solicitor's Office

Lauren Walley
Senior Solicitor
Victorian Government Solicitor's Office

Monday, 23 March 2020

Farming and agricultural leases confirmed as not part of the Retail Leases Act 2003 - what is covered and what will this mean to you?

The Minister for Small Business has made a determination that the Retail Leases Act 2003 does not apply to leases of farm premises for commercial farming or agricultural purposes.

What farming and agricultural leases are covered by this exclusion?


The Minister's determination confirms that a lease will not be caught by the Retail Leases Act 2003 if the lease is to use the premises wholly or predominantly for any of the following activities for commercial gain:

  • Agricultural, pastoral, horticultural or apicultural activities
  • Poultry farming, dairy farming, aquaculture, tree-farming or any business that consists of the cultivation of soils, the gathering of crops or rearing of livestock
  • Grazing, including agistment
  • Activities prescribed as a farming operation for the purpose of the Farm Debt Mediation Act 2011. At this time there are no farming operations prescribed under that Act.

This exclusion is likely not to extend to tenants who lease farm land to carry out retail sale of goods and services to the public, so that the lease cannot be said to be wholly or predominantly for one or more of the above activities.  For example, leased premises used for operating cheese stores or winery cellar doors open to the public in some circumstances.

The exclusion will also not extend to tenants who are not operating for commercial gain. E.g. Hobby farming; for charitable or public purposes.

This exclusion takes effect from 29 October 2019, and all leases entered into or renewed from that date.

What does this mean for you?


In negotiating a new farming or agricultural lease, landlords and tenants should consider whether the tenant's proposed operations on the land meet the criteria of the exclusion set out above.  Amendments can then be made to the proposal depending on whether the parties would like the Retail Leases Act 2003 to apply.

When preparing or re-negotiating the lease, the permitted use under the lease should be appropriately drafted to ensure the lease is not captured by the Retail Leases Act 2003

For advice and assistance, please contact:

Margaret Marotti
Managing Principal Solicitor
Ph: 9947 1410

Lauren Walley
Senior Solicitor
Ph: 9947 1454

Monday, 30 September 2019

So I'm a 'retail' landlord - but what does that mean?

Government agencies are often landlords of 'retail premises' under the Retail Leases Act 2003, for example where the agency leases land at a train station for use as a café or part of a public hospital for use as a florist or kiosk.

The Retail Leases Act was introduced in 2003 to provide greater certainty and fairness in the commercial relationship between landlords and tenants. This was driven by a desire to protect and provide greater security of tenure for small businesses.

When you are negotiating a lease, it is crucial to identify at the outset of negotiations whether it is a 'retail lease' within the meaning of the Act. Where the Act applies, the parties to a lease cannot agree otherwise. A provision in a lease is void if it is inconsistent with anything in the Act.

In some instances, if the Act applies, a landlord may even prefer not to proceed with the transaction, for example, if the premises are likely to require significant and expensive capital repair or refurbishment, as this burden could fall on the landlord. It may be more economical to find a tenant who wishes to make use of the premises for non-retail purposes, if the nature of the premises permits.


Landlords' obligations


The Act imposes quite onerous obligations on landlords. Depending on the circumstances, there can be serious consequences for failure to comply, for example, the tenant may have a right to terminate (or conversely, to extend) the lease.

Some of the main obligations which the Act imposes on landlords are:

  • Provide a copy of proposed lease and information brochure: the landlord must provide to a tenant copies of the proposed lease and the Victorian Small Business Commission information brochure, as soon as the parties enter into negotiations. Failure to do so is an offence against the Act.
  • Disclosure requirements: the landlord is required to provide a Disclosure Statement to a tenant at least 7 days before entering into the lease, which sets out the key information about the lease.  If the landlord fails to provide a Disclosure Statement, the tenant may, after complying with certain notice requirements, withhold rent owed and is not liable to pay rent for the period from the day on which the tenant's notice was given until the tenant receives a Disclosure Statement. The tenant may also terminate the lease at any time before the end of 7 days after receiving the delayed Disclosure Statement.
  • 5-year minimum term: the landlord must offer an initial term of at least 5 years (but the tenant can waive its right to a 5-year term with the Small Business Commissioner's approval).
  • Provide a copy of the executed lease: the landlord must give the tenant a copy of the lease signed by the parties within 28 days of it being signed. If the landlord fails to do so, the tenant may give written notice terminating the lease.
  • Obligation to notify tenant of options for renewal: where a lease contains an option to renew, the landlord must give the tenant notice in writing of the last date to exercise the option, between 6 and 12 months in advance of the date on which the option is no longer exercisable. Failure to do so means that the lease continues, and the period for exercising the option extends to six months after the landlord notifies the tenant as required.
  • Notice of landlord's intentions concerning renewal: where a tenant does not have an option for renewal under the lease, the landlord must also give written notice between 6 and 12 months before the end of the lease. This notice must either offer lease renewal or state that the landlord is not offering a lease renewal. If the landlord fails to give notice within the period, the lease continues until six months after notice is finally given to the tenant, or when the tenant terminates the lease.
  • Must allow transfer of lease: a landlord can only refuse consent to assign a lease in limited circumstances set out in s 60(1) of the Act, such as where the proposed use is not consistent with the permitted use under the lease.
  • Obligation to maintain premises: the landlord must maintain the structure, fixtures and plant and equipment in the premises consistently with their condition at the beginning of the lease. The landlord cannot pass on capital costs incurred in complying with this obligation, such as major repairs and replacements, to the tenant.1
  • Cannot pass on certain costs: the landlord cannot recover from the tenant any capital costs (unless the lease expressly requires the tenant to undertake certain specific capital works at the tenant's own cost), depreciation, land tax or legal costs related to preparing the lease.
  • Unconscionable conduct: the Act prohibits unconscionable or unfair conduct by both landlords and tenants, and allows for compensation for loss caused by that conduct. 


Resolving disputes


Where parties cannot agree on resolution of an issue arising under a retail premises lease, either party may refer the dispute for mediation to the Victorian Small Business Commission (VSBC).

Only once the VSBC certifies that mediation has failed, can the parties apply to the Victorian Civil and Administrative Tribunal (VCAT) for a formal hearing.

VCAT has exclusive jurisdiction to hear and determine some disputes arising under a retail premises lease. VCAT also has the same jurisdiction and powers as the Supreme Court in relation to proceedings for relief against forfeiture. This means that tenants can seek an order allowing them to stay in the premises, even in circumstances where they have breached the lease and failed to rectify the breach within time, by satisfying VCAT that the tenant is in a position to promptly rectify the breach and the lease should be reinstated.

As property law experts within Government, the VGSO Property Team is well placed to assist you with retail leasing arrangements and other property issues.

For advice and assistance, please contact:

Anthony Leggiero
Managing Principal Solicitor
Ph: 9947 1430

Margaret Marotti
Managing Principal Solicitor
Ph: 9947 1410

Elizabeth Wortley 
Principal Solicitor
Ph: 9947 1433

This blog was prepared with the assistance of Margie Brown, Law Graduate.

_____________________
Small Business Commissioner Reference for Advisory Opinion [2015] VCAT 478

Monday, 14 May 2018

The 2018-2019 Victorian Budget: Does your project involve sale, acquisition or leasing of land?


In response to the demands placed on existing State services and public infrastructure by strong population growth, the Victorian Budget announced allocation of funding for several substantial infrastructure projects.  Funded projects have been identified in diverse fields, such as: road and rail; building and expanding hospitals; purchasing land for new schools; and delivering new or upgraded facilities for emergency services staff and volunteers.  In addition, the Federal budget announced funding for the State's Airport Rail Link and North East Link freeway infrastructure projects.  In order to deliver these infrastructure projects, sponsoring agencies will need to acquire, sell, lease and access land, and in doing so, navigate legislative and policy frameworks regulating Government dealings with land.

The Victorian Government Land Transactions Policy and Guidelines April 2016 establishes strict requirements for Victorian Government agencies when dealing with the sale, acquisition and leasing of land.  Key features of the policy include that in the absence of an exemption, agencies:

  • must obtain the Victorian Government Land Monitor's approval for any sale or purchase of an interest in land with a value of $750,000 or more before an offer is made;
  • must not grant an interest in land at a price less than the current market rent or sale value, as determined by the Valuer-General Victoria (VGV);
  • must not purchase an interest in land at a price which is greater than the current market rent or sale value, as determined by the VGV;
  • must not sell any land without following a public process such as an auction, tender or expression of interest campaign;
  • prior to offering land for sale by a public process, have in place the most appropriate zoning which enables the land to be used or developed in accordance with its highest and best use; 
  • must not grant a lease of land which contains an option to purchase; and
  • must have regard to the existence of native title rights and interests in the land.

Where a lease over Crown land is proposed, an agency must consider: whether the land is reserved for a public purpose; who the appointed land manager is; the criteria for approving the permitted use and agreement terms as set out in legislation; and the maximum tenure lengths permissible.  These are typically set at 21 years for leases and 10 years for licences (each including options).  This analysis will help to identify the Government entity with authority to grant the lease and any salient legislative restrictions such as maximum terms and limitations on permitted uses.  The Leasing Policy for Crown Land in Victoria 2010 administered by DELWP ensures a consistent approach to leasing of Crown land by requiring:

  • use of DELWP's standard form leasing documentation; and
  • all lease proposals by a land manager other than the Minister for Energy Environment and Climate Change to have the Approval in Principle of the Minister and subsequent terms and conditions approval.

The VGSO Property and Native Title Teams have extensive experience in Government property transactions and are well placed to assist agencies in navigating compliance with legislation and policies applicable to sale, acquisition and leasing of land.

Anthony Leggiero
Managing Principal Solicitor
9947 1430

Mary Scalzo
Managing Principal Solicitor
9947 1419

Wednesday, 16 November 2016

As a landlord, do I have to comply with the Retail Leases Act 2003?

As a general rule, landlords, particularly landlords of commercial properties, enjoy superior bargaining power when it comes to leasing their properties.  The terms and conditions of leases are set by the landlord and, subject to market conditions and the bargaining power of a potential tenant, are often non-negotiable.  In these circumstances, the only option for a potential tenant may be to walk away from the transaction.

The Retail Leases Act 2003 (Act) addresses this imbalance in bargaining power for leases of retail premises in a number of ways, for example by providing that:

  • a landlord cannot pass on to a tenant the cost of preparing and negotiating the lease; 
  • a landlord must consent to a tenant's request for assignment of the lease except in limited circumstances;
  • a tenant has a right to a minimum term of 5 years, even if the lease provides for a shorter term.  However, a tenant can contract of out this right if the tenant obtains a certificate from the Small Business Commissioner under s 21(5) of the Act and gives the landlord a copy of the certificate; and
  • a landlord is responsible for undertaking certain repairs and maintaining the premises in certain ways.

What are 'retail premises'?

The Act applies to leases of 'retail premises' entered into or renewed after 1 May 2003.
'Retail premises' are premises that, under the terms of the lease, are used wholly or predominantly for:

  • the retail sale or hire of goods;
  • the retail provision of services; or
  • the carrying on of a specified business or specified kind of business as determined by the Minister.

Exemptions to the Retail Leases Act 2003

Not all retail tenancies are leases of 'retail premises'.  Some types of leases are exempt from the application of the Act, and the Minister for Small Business, Innovation and Trade has the power to exempt further kinds of business, premises, tenant or leases.
In Government, some of the more commonly encountered categories of exempted leases are:

  • Local council premises used wholly or predominantly for public or municipal purposes;
  • Leases for premises used wholly or predominantly for public or municipal purposes with a rent of $10,000 or less;
  • Premises where occupancy costs under the lease are more than $1,000,000 p/a;
  • Premises where the tenant carries on the business as the landlord's employee or agent;
  • Premises where the tenant is a listed corporation or its subsidiary;
  • Premises located above the first three storeys in a building used for retail purposes; and
  • Leases 15 years or longer in duration that impose substantial obligations on the tenant.

Why does it matter?

The Act alters the balance of power between tenants and landlords by imposing a number of obligations on landlords and creating various tenant rights.  In order to understand their rights and obligations, landlords and tenants must know whether their lease is governed by the Act.  Departments and Agencies proposing to grant a lease of retail premises should always check whether an exemption applies.
As property law experts within Government, the VGSO Property Team is well placed to assist you with land use arrangements and other property issues.  For further advice and assistance, please contact:

Anthony Leggiero
Managing Principal Solicitor
9947 1430

Elizabeth Wortley
Senior Solicitor
9947 1433

Wednesday, 15 June 2016

The Victorian Government Land Transactions Policy and Guidelines

The Victorian Government has recently released its new Land Transactions Policy and Guidelines (Policy and Guidelines).

The Policy sets out what is required of Victorian Government agencies when they buy, sell or lease land. It also sets out what is required when agencies provide compensation under the Land Acquisition and Compensation Act 1986 and Part 5 of the Planning and Environment Act 1987.

The Guidelines provide information and guidance to assist agencies to comply with the Policy's requirements.

The Policy's requirements apply to:

  • Victorian Government departments;
  • public statutory authorities;
  • legal entities established under State legislation for a purpose of the State (including those independent of government control);
  • companies in which the State has an interest; and
  • organisations, other than councils, which require statutory authorisation and/or ministerial approval, especially where public funds are involved in a land transaction.

Background


The Policy and Guidelines replace the Victorian Government's Policy and Instructions for the purchase, compulsory acquisition and sale of land (Instructions), which were adopted by then-Minister for Planning, the Hon John Thwaites MP, in August 2000.

The Instructions were intended to ensure that Victorian Government agencies adopt 'a consistent best-practice approach to their property transactions.'

Introduction to the Policy


The core elements of the Policy are consistent with the old Instructions. Agencies generally must not sell any land at a price less than its current market value, or buy any land at a price greater than its current market value. For this purpose, agencies must obtain valuations from the Victorian Valuer-General (VGV). Agencies also require the approval of the Victorian Government Land Monitor (VGLM) for any transaction (or group of related transactions) where the value of that transaction is $750,000 or more. There are a range of procedural requirements for the sale of land. Agencies generally may only sell land through a public process, and must provide clear information to prospective purchasers as to potential uses to which the land may be put.

Key differences from the old Instructions


The Policy and Guidelines introduce some important changes, and provide greater clarity or renewed emphasis about particular matters.

First, the Policy now regulates leases. Agencies may only grant or acquire leases or other interests in land at market rental value or better, as determined by the VGV. An agency also must not grant a lease of land which contains an option to purchase, unless the lease is granted to another government agency. However, the Guidelines exempt significant categories of leases (at section 10.2). The Policy also does not apply to licences.

Secondly, the Policy places clearer assurance obligations on agencies to ensure that all transactions are conducted to achieve accountability and transparency. In relation to accountability, the Guidelines state that an agency must ensure that:

  • it has the legislative power to undertake the land transaction;
  • it has obtained all necessary approvals to proceed with the transaction;
  • appropriate delegation is in place where it is proposed an authorised officer of the agency approve and execute the transaction; and
  • roles, responsibilities, authority and accountability of agency officers involved in the transaction are clearly articulated and well understood.

In relation to transparency, land transactions must be supported by processes that provide evidence of transparency of actions, equity in dealings, confidentiality, probity assurance and management of conflicts of interest.

Third, the Policy and Guidelines provide more detailed guidance on the requirement for agencies to conduct an appropriate level of due diligence. Prior to the disposal, acquisition or lease of land, agencies must conduct an appropriate level of due diligence to ensure they are fully informed of the status and attributes of the land. The depth of due diligence required will vary from transaction to transaction, but the Guidelines cover the following areas:

  • legal (specifically, ownership of and authority to deal with the land, and any encumbrances on the land);
  • public land values (in respect of Crown land);
  • survey;
  • planning;
  • contamination and pollution;
  • cultural heritage; and
  • Native Title and Traditional Owner Rights.

The Guidelines provide a helpful due diligence checklist in Appendix 1, to assist agencies in becoming fully informed as to the status and attributes of the relevant land. Appendix 2 contains a VGLM checklist, to assist agencies in deciding when to seek approval or assistance from the VGLM.

Fourth, the Policy sets out clearly the circumstances in which it does not apply to particular transactions. The Policy provides a list of exempted transactions in section 2(d).

A full copy of the Policy is available on the website of the Department of Environment, Land, Water and Planning at http://www.dtpli.vic.gov.au/property-and-land-titles/valuation/government-valuations/government-land-monitor. We understand that the Department of Environment, Land, Water and Planning and the VGV will be promoting the Policy and Guidelines in coming months.

In the mean time, if you would like further advice on the new Policy and Guidelines, please contact:

Anthony Leggiero
Managing Principal Solicitor
Property Team
9947 1430
anthony.leggiero@vgso.vic.gov.au

Mark Egan
Acting Managing Principal Solicitor
Land Acquisition, Planning and Environment Team
8684 0489
mark.egan@vgso.vic.gov.au

Margaret Marotti
Managing Principal Solicitor
Property Team
9947 1410
margaret.marotti@vgso.vic.gov.au

Elizabeth Wortley
Senior Solicitor
Property Team
9947 1433
elizabeth.wortley@vgso.vic.gov.au

Thursday, 26 November 2015

Lease vs Licence - What difference does it make? (Part 2)

Based on the public and personal feedback, our blog topic from September 2015 on the differences between leases and licences certainly seems to have been quite topical.

One reader requested that we provide some more examples for Government practitioners of circumstances where a lease or a licence might be appropriate.  Of course, the particular circumstances of the transaction will determine the form of tenure that is appropriate for the intended use of premises.  With that in mind, we provide some further examples of where a lease or licence might be appropriate for the intended use of the premises.

Lease examples

In short, a lease will be appropriate where the tenant requires exclusive use of land and/or premises for the permitted use.  Where government is the tenant, such uses include delivery of long term projects and services, for example prisons, hospitals and police and court house facilities. 

Where government is the landlord, such uses would include:
  • commercial or trading purposes where the operator will undertake a fitout and install furniture, computers, etc;
  • sensitive and important community services such as the provision of child care facilities; and
  • provision of education services, such as by a TAFE institute.

Licence examples

The granting of exclusive possession and other leasehold rights is not necessary for all land uses.  Common examples of where a licence of land may be appropriate include:
  • installation of power line infrastructure by an electricity generation company;
  • special event licences for community, cultural or sporting events;
  • site investigations for development proposals;
  • construction licences or licences for the installation of services and utility infrastructure; and
  • cutting or taking away fallen or felled trees for domestic use as firewood.

If you would like further advice regarding land use arrangements and other property issues, the VGSO Property Team is well placed to assist you.  Please contact:

Margaret Marotti
Managing Principal Solicitor
9947 1410
margaret.marotti@vgso.vic.gov.au

Anthony Leggiero
Managing Principal Solicitor
9947 1430
anthony.leggiero@vgso.vic.gov.au

Elizabeth Wortley
Senior Solicitor
9947 1433
elizabeth.wortley@vgso.vic.gov.au

Friday, 4 September 2015

Lease vs Licence - What difference does it make?

The State and its agencies own and manage vast tracts of land in Victoria, much of which offers potential economic or other benefits to the private sector.  For example, the State often makes land and buildings available to a business operator for the purposes of running its business or a community group so it can  hold meetings, workshops and/or training sessions.  Alternatively, the State may wish to make land available for use by the private sector in the furtherance of particular significant policy objectives.

Preliminary considerations


Before deciding on the nature of the tenure which your department or agency should grant over a piece of land, it is important to step back and ask a few questions. For example, you should consider:

·         Who wants to occupy the land and for what purpose?
·         Does the Government want to make the land available to achieve a particular policy objective?
·         Does achieving that purpose require exclusive possession or is a lesser form of tenure sufficient?
·         Does the future tenant need to put up the tenure as security for raising capital so they can finance the project?
·         Will the department or agency or third parties need to access the land while it is occupied?

The answers to these questions will assist with determining which form of tenure you should offer to the prospective occupant and the terms and conditions of that tenure.

When is a lease appropriate?


A lease is an agreement between an owner of land and a tenant which grants a right of exclusive possession to the tenant.  This means the tenant can exclude the whole world, including the landlord, from accessing the land for the term of the lease as long as the tenant complies with its obligations under the lease agreement.  Even if a tenant breaches a condition of the lease and risks 'forfeiting' the lease, a leasehold tenant can apply to the Court for the equitable remedy of relief against forfeiture.  If the tenant is successful, the Court will permit the tenant to remain on the land, subject to prompt rectification of the existing breaches and compliance with other conditions.

The rights under a lease will attach to the leased land - if the tenant assigns the lease to a third party, for example if the tenant sells its business, the third party will also enjoy the same right of exclusive possession of the leased premises. 

Another aspect of a lease is that it is capable of being registered on the title to the land.  Registration of the lease also enables registration of any mortgage granted over the leasehold interest.  So if a tenant has granted a mortgage to a bank as security for money borrowed against the lease and the tenant defaults in its mortgage repayments, the bank will be able to access the important statutory powers applicable to a mortgagee in Part IV of the Transfer of Land Act 1958.  These include a mortgagee's power of sale, the power to take possession of the land and a right to seek an order for foreclosure.  As a result, banks may be more willing to provide finance to a tenant with a registered leasehold interest.

These aspects may make a lease an attractive option to someone who wants to operate a business from the premises and needs to raise investment capital for its start up and who also wants the flexibility of later transferring the leasehold interest, along with the business, to a third party. 

Of course, a downside for a tenant is that a higher commercial value is likely to attach to the lease consistently with the powerful bundle of rights held by a leasehold tenant.

When might you grant a licence?


Like a lease, a licence grants a right to a party to access and occupy land subject to the terms of the licence. 

Unlike a lease, the occupant under a licence does not have the right to exclusive possession of the licensed premises - in other words they may have to share occupation with the licensor and third parties or may only be able to use the licensed area at certain times or days.

Another key difference of a licence to a lease is that the rights of a licensee are not assignable to a third party (unless the agreement specifically permits this).  Additionally, a licence interest cannot be registered on title.

Therefore, a licence is likely to be suitable where an occupant needs specific rights to an area of land, water or airspace, but it is not necessary or appropriate for the occupant to have the right to exclude the rest of the world from the premises.  Examples of where licences are commonly used in Government include granting a right to a telecommunications company to install a mobile telecommunications tower on State owned land and allowing community groups to use school buildings and facilities.

As property law experts within Government, the VGSO Property Team is well placed to assist you with land use arrangements and other property issues.  Please contact:

Anthony Leggiero
Managing Principal Solicitor
9947 1430
anthony.leggiero@vgso.vic.gov.au