stamp duty on deed of assignment of lease

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Assignment of lease

ADIS Code -  LASS

An assignment of lease, including a sub-lease, is a transfer of the lease by the lessee, ie the assignor, to a new lessee, ie the assignee. The lessor is usually not a party to the assignment.

The affected lease or sub-lease is not required. For an assignment of a lease affecting Kosciuszko National Park .

Lodgment requirements

Stamp duty -  Required. If not marked Registration insisted upon , is prohibited.

Any alteration to the term or rent must be marked.

Registration copy - Required. If unacceptable, Registration insisted upon  is prohibited.

Statement of Title Particulars form  - Not required.

NOS form  - Not required.

Index Particulars form (completion)

(A) Lodging Party - Must be completed.

(B) Instrument - Lease - Assignment of

(C) Locality -  Not required.

Link Conveyance - Not required.

Principal Deed - The registered affected lease or sub-lease.

(D) Indexing -  The assignor and the assignee, and the sub-lessor for an assignment of a sub-lease.

(E) Certification -  Required.

Document requirements 

Date: must be dated with the date of execution. If not dated advise the lodging party. If a date is not furnished, indicate Registration insisted upon  and include the reason.

Name: the full names (initials are acceptable) of the assignor and the assignee are required. Advise the lodging party of any discrepancies in names.

Operative clause: "... hereby assigns...".

Principal Deed: the number of the affected lease or sub-lease as stated in the assignment must be identical to the number stated on the IPF. If affecting a sub-lease, the head lease number is also required.

Execution: by the assignor. A power of attorney must be registered, The assignee does not have to sign.

Attestation: required. Must be witnessed by a person of 18 years of age or older who is not a party to the document.

IPF: must be completed.

Staff processing information

A Deeds search may be made for the head lease number.

CA Not required

Locality: nil.

Link Conveyance: nil.

Principal Deed: required. The registered number of the lease or sub-lease being assigned, and the registered number of the head lease for an assignment of a sub-lease.

Noting: "Affecting [description of the land]".

If the assignment affects:

• an interest, state: "interest in" (or Noting Code: "I"
• a share, state: "[fraction] share"
• part of the land, state: "[affected land description]"
• the land description relies on an attached plan, state: "see attached plan" (or Noting Code: "PL").

V: the assignor, and the sub-lessor for an assignment of a sub-lease, deceased estates or trusts, and any variations thereof.

P: the assignee, deceased estates or trusts, and any variations thereof.

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• Commercial Leases and Stamp Duty in NSW
• Commercial & Business Law

• March 25, 2022
• Commercial & Business Law , Commercial & Retailing Leasing
• No Comments

Stamp duty can be a difficult concept to understand and is particularly challenging when parties are considering whether this is payable across NSW in relation to various commercial leases. It is important that thorough consideration is afforded to this area of law to ensure that no unwarranted penalties are incurred throughout or after the leasing transaction has been completed.

Stamp Duty is a tax imposed on the purchase of assets and certain transactions relating to property. In 2008, NSW abolished stamp duty on new Leases and on Variation of Leases, but there are still some commercial leasing transactions that require stamp duty to be paid.

Stamp duty is payable on the following commercial lease transactions:

i)      Transfer/Assignment of Lease – A Transfer/Assignment of Lease is a relatively common leasing transaction, particularly in relation to a Sale of Business. In this transaction the lease is transferred by the current Tenant (Assignor) to the incoming Tenant (Assignee) and is subject to a nominal sum of $10.00 stamp duty for the transfer. The duty is to be paid by the Assignee (incoming tenant).

ii)     Surrender of Lease – A Surrender of Lease occurs in matters where the parties agree for the Lease to end. When the Tenant of a lease voluntarily gives up their Lease and forgoes the accompanying rights to the Landlord before the term has expired, a Deed of Surrender of Lease and a Land Registry Services Form 07DL are required to be executed/lodged. Similarlily, this attracts a nominal $10.00 duty sum and is payable by the Lessee when surrendering the Lease.

In some special circumstances, duty can be required in relation to a new lease. This occurs when a proposed tenant puts forward a lump sum payment to entice a landlord to grant a lease and is held to be a capital payment. However, this is a rather infrequent occurrence.

Commercial Leasing transactions can be complex for parties, so it is essential that parties obtain suitable legal advice to ensure that all of the necessary legal requirements are addressed and that there are no hidden costs down the line. Related Tag:- Estate Will Lawyers Newcastle

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Assignment of Lease Explained

• December 1, 2023

Understanding the complexities surrounding the assignment of a lease is crucial for both tenants and landlords. Within the UK, various situations might compel a tenant to transfer their lease to another party. In this guide we will delve into the essentials, helping you understand every facet of a lease assignment.

What is an Assignment of Lease?

In the world of property management and real estate, the concept of an “assignment of lease” is fundamental. It involves a tenant, known as the assignor, transferring their entire legal interest in a property to another individual or entity, called the assignee. This process is common in both residential and commercial contexts and plays a significant role in maintaining the fluidity of property interests, especially in a dynamic market.

When a tenant signs a lease, they agree to specific commitments, including paying rent and maintaining the property, which are enforceable for a set period. However, various circumstances may prompt a tenant to vacate the property before the lease term expires. Herein lies the importance of the assignment of lease.

Through lease assignment, the original tenant can exit the property and pass on the responsibility to a third party, who then assumes the role of the tenant with all its incumbent responsibilities. It’s important to note that while the new tenant steps into the shoes of the original tenant, the lease terms remain unchanged.

For instance, if an individual rents a flat and later decides to move out before the lease’s expiration due to reasons such as relocating for a job or changing living situations, they may opt for an assignment of the lease. This strategy allows another person to take over the living space and adhere to the responsibilities under the original lease, ensuring that the flat does not remain unoccupied and the landlord continues to receive rent payments. This seamless transition can be especially beneficial in residential areas with high demand for housing, as it minimises financial instability for the landlord and provides immediate accommodation for those in need of a home.

Key Components of Lease Assignment

• Assignor and Assignee: The existing tenant (assignor) and the new tenant (assignee) are the primary parties in this agreement. Their willingness to transfer and assume the lease’s obligations, respectively, drives the assignment process.
• Landlord’s Role: While not a direct party to the assignment, the landlord plays a pivotal role. Most lease agreements stipulate that landlords must provide consent before any assignment takes place. This clause protects the landlord’s interests, ensuring the new tenant is reliable and meets the required standards.
• Legal Documentation: The process requires several legal documents, including the initial lease agreement and a deed of assignment. The latter must clearly articulate that all rights and responsibilities have been transferred to the new tenant. This precision prevents future disputes regarding the terms of the lease.
• Liabilities: The assignment of lease doesn’t inherently absolve the original tenant of responsibilities. Depending on the agreement’s terms, the assignor might remain liable if the assignee fails to fulfil the lease obligations. This potential continued liability underscores the importance of thorough assignee vetting.

The Legal Ground

The legality surrounding the assignment of a lease is rooted in UK property law. It necessitates compliance with various statutory requirements and often involves complex legal procedures. Consequently, parties usually engage solicitors to ensure that the assignment aligns with legal protocols, protecting the interests of all involved parties.

The assignment of a lease is a nuanced process, influenced by factors unique to each situation. Whether prompted by personal, business, or financial changes, lease assignments facilitate flexibility in property occupancy and use. Understanding this concept is crucial for tenants seeking an early exit from a lease, individuals looking for established lease properties, and landlords wishing to maintain continuous tenancy and income streams.

Understanding the Deed of Assignment of Tenancy

A “deed of assignment tenancy” is a legal document that evidences the transfer of lease obligations from the current tenant to another. It is an essential part of the lease assignment process, binding the new tenant to the terms stated in the original lease.

Landlord’s Checks Before Permitting Assignment of a Lease

The assignment of a lease, while beneficial in maintaining continuous occupancy and consistent rent payments, necessitates thorough due diligence on the part of the landlord. Before consenting to an assignment, it’s imperative for landlords to conduct comprehensive checks, mirroring the depth of evaluation done during the initial tenant screening process. These checks are crucial in mitigating potential risks and safeguarding the landlord’s investment.

Detailed Assessment of the Prospective Assignee

Landlords should ascertain the financial stability and reliability of the assignee. This assessment often involves:

• Credit Checks: This allows landlords to have a clearer understanding of the prospective assignee’s credit history, highlighting their ability to keep up with regular rent payments and financial commitments.
• Employment Verification: Landlords typically require proof of ongoing, stable employment. This verification helps ensure that the new tenant has a consistent income stream capable of covering the rent and other associated costs.
• References: Previous landlords or property managers can provide insights into the assignee’s behaviour, paying habits, and overall reliability. Personal references might also be necessary to form a more comprehensive view of the prospective tenant.

Review of the Assignee’s Intent

Understanding the prospective tenant’s reasons for seeking the property and their long-term intentions can provide reassurance. For instance, landlords should feel more comfortable knowing that the assignee plans to reside in the property for an extended period and doesn’t intend to sublet without permission or engage in unlawful activities.

Examination of Financial Documentation

Landlords may request documentation such as bank statements or savings accounts to further verify the assignee’s ability to afford the property. This scrutiny is particularly pertinent in higher-rent areas or for properties with higher maintenance costs.

Ensuring Contractual Compliance

It’s important for the landlord to confirm that the assignee understands and agrees to the terms set out in the original lease. The assignee must comply with all existing conditions, and any deviation needs to be negotiated with and approved by the landlord.

Legal Considerations

Given the legal complexities surrounding lease assignments, landlords often seek legal advice during this process. Lawyers can help ensure that the assignment adheres to local property laws, the original lease’s terms, and that the landlord’s interests are thoroughly protected throughout the transition.

By conducting these comprehensive checks, a landlord exercises due diligence, significantly reducing the likelihood of issues arising from the assignment of the lease. This meticulous approach helps maintain the property’s revenue stream, upholds community standards, and ensures the continued preservation and value of the property investment. It’s a proactive measure, providing the landlord with peace of mind that they are handing over their property to a reliable and responsible assignee.

Costs Involved in Lease Assignment

The process of lease assignment, while a practical solution for tenants looking to transfer their lease obligations, does entail various costs that both the assignor (original tenant) and assignee (new tenant) need to consider. These expenses contribute to a seamless transfer process, ensuring all legalities are properly managed, and all parties are adequately protected. Understanding these costs is essential as it prevents unexpected surprises and allows for a more transparent transaction.

Costs for the Assignor

• Advertising Costs: If the landlord does not immediately have a new tenant, the original tenant may need to advertise the property. This could involve online listings, printed materials, or hiring an estate agent to expedite the process, all of which incur costs.
• Tenant Screening Costs: The assignor might opt to conduct preliminary screenings of potential assignees, which include credit checks, reference checks, and other background investigations to ensure they’re presenting a reliable tenant to the landlord.
• Legal Fees: The legal intricacies of transferring a lease require the involvement of legal professionals. The assignor typically bears the cost for legal consultations, drafting the deed of assignment, and any related legal documentation.
• Landlord’s Administrative Fees: Some landlords charge an administrative fee for processing a lease assignment, covering the time and resources they expend to conduct their checks and modify their records.
• Potential Liability Costs: If the assignee fails to meet the lease obligations, and depending on the terms of the assignment, the original tenant may remain partially liable. This contingent liability could lead to future costs.

Costs for the Assignee

• Security Deposit: It’s standard practice for the new tenant to provide a security deposit before moving in. In some cases, the assignee reimburses the original tenant for the initial deposit, depending on its condition and any agreement between the parties.
• Advance Rent: The assignee may need to pay the first month’s rent in advance, similar to standard leasing arrangements.
• Legal Fees: Assignees also incur legal fees. They need legal counsel to review the terms of the lease, ensure the assignment is conducted correctly, and understand their new responsibilities and liabilities.
• Stamp Duty: Depending on the property’s value and the lease’s remaining duration, the assignee might need to pay Stamp Duty Land Tax (SDLT) on the premium or the rent of the lease.

Shared Costs

In some instances, both parties negotiate and equally share specific costs, such as those for legal consultations, to ensure fairness and mutual satisfaction in proceeding with the transaction.

Both assignors and assignees must factor in these expenses to accurately assess whether a lease assignment is a financially viable option. It is advisable to consult with real estate professionals and legal advisors to understand all potential charges fully. Having a clear, upfront understanding of these costs allows both parties to make informed decisions, ensuring a smooth, transparent, and fair transition process.

Does Assignment Create a New Tenancy?

No, an assignment does not create a new tenancy. It merely transfers the existing tenant’s rights and obligations to the new tenant, who then steps into the shoes of the original tenant under the same lease terms.

The Necessity of Legal Assistance

It is highly advisable to engage a solicitor during the assignment of a lease. A solicitor can provide necessary legal advice, prepare the deed of assignment of lease, and ensure compliance with various property and contract laws.

Deed of Assignment vs Tenancy Agreement

While they might sound similar, a deed of assignment is not the same as a tenancy agreement. The former refers to the document transferring existing lease rights to a new tenant, while the latter is a contract outlining the terms between a landlord and tenant for new occupancy.

Parties Involved in Signing the Deed of Assignment

The deed of assignment of lease is typically signed by the outgoing tenant, the incoming tenant, and sometimes, the landlord, especially when their consent is a prerequisite for the lease transfer.

Landlord’s Consent to Lease Assignment

A landlord can refuse to consent to assign a lease, but this refusal must be reasonable. Scenarios for justifiable refusal might include the prospective tenant’s inability to meet financial commitments or proposed use of the property that violates lease terms.

Lease Assignment vs Subletting

• Lease assignment involves the complete transfer of the tenant’s rights to another party.
• Subletting occurs when the tenant temporarily hands over the property rights to another party but retains some rights or eventually plans to return.

Financial Responsibilities in Lease Assignment

Typically, the outgoing tenant or the incoming tenant covers the costs related to the assignment of lease, such as legal fees, administrative charges, and any leasehold improvements. The specific arrangements may vary based on mutual agreements.

Assigning a Lease Without a Deed: Is It Possible?

No, a lease assignment must be evidenced by a deed to be legally binding. The deed of assignment tenancy is crucial as it protects the interests of all parties involved and provides legal clarity.

The Meaning of ‘Assignment’ in Rent Context

In the context of renting, ‘assignment’ refers to transferring the existing tenant’s lease obligations and rights to another party. The assignee assumes responsibility for rent payments and adherence to the lease terms.

Advantages of Assigning a Lease

There are several benefits associated with the assignment of a lease, including:

• Flexibility for the tenant needing to vacate the property before lease termination.
• Minimal interruption in rent payments for the landlord.
• Opportunity for another tenant to occupy the premises without having to negotiate a new lease.

Stamp Duty and Lease Assignment

Stamp duty on assignment of lease may apply depending on the premium paid and the lease’s yearly rent. It’s important to consult a solicitor to understand any potential tax implications.

Post-Assignment Liabilities for Tenants

After the assignment of a lease, the original tenant is generally released from future liabilities. However, they may remain liable if the new tenant defaults, depending on specific lease terms or if guarantees were provided.

Essential Documents for Lease Assignment

In the process of a lease assignment, several critical documents must be prepared, reviewed, and signed to ensure a legally binding transfer of rights and responsibilities from the original tenant (assignor) to the new tenant (assignee). These documents are crucial in defining the terms of the assignment, protecting the interests of all parties involved, and complying with legal standards. Here are the essential documents required for a successful lease assignment:

1. The Original Lease Agreement

• Before any transfer, all parties must review the original lease. It’s vital to understand any clauses or terms that could impact the assignment, such as conditions requiring the landlord’s consent for any lease transfer.
• The original lease agreement serves as the foundation for the assignment, outlining the terms and obligations that the assignee will need to adhere to.

2. Deed of Assignment of Lease

• This legal document formally transfers the lease obligations from the assignor to the assignee. It must clearly state the terms under which the lease is assigned, including any continuing liabilities of the assignor, if applicable.
• It should be comprehensive, detailing the rights and responsibilities of all parties and any guarantees provided by the assignor.
• The deed is usually drafted by a solicitor to ensure that it complies with legal standards and adequately protects everyone’s interests.

3. Landlord’s Consent to Assignment

• Most leases require the landlord’s formal approval for any assignment to occur. This document is the landlord’s written agreement, permitting the transfer from the current tenant to the new one.
• It may come with conditions the assignee must satisfy, which should be clearly outlined in the consent form.

4. Assignee’s Letter of Acceptance

• This document is proof that the assignee understands and agrees to the terms set out in the original lease and the deed of assignment.
• The letter may restate key lease terms for clarity and will affirm the assignee’s commitment to abide by all the lease conditions and responsibilities.

5. Legal Advisories

• Though not a formal part of the lease assignment, documentation of legal advice received by both the assignor and assignee (and possibly the landlord) is crucial.
• These advisories ensure each party has been informed of their legal rights and obligations, potentially offering protection in the event of future disputes.

6. Inventory List

• If relevant, an inventory list detailing the condition of the property, especially for furnished rentals, would be necessary. This document helps manage expectations and responsibilities concerning the property’s state and contents at the time of the assignment.

7. Proof of Assignee’s Financial Stability

• While not always formally part of the assignment documentation, evidence of the assignee’s ability to meet financial commitments (like bank statements or employment confirmation) often needs to be submitted to the landlord during the assignment process.

The process of assigning a lease is a complex legal transaction that requires strict adherence to procedural standards. These essential documents ensure that the assignment progresses smoothly, with clear understanding and agreement from all parties involved. Both assignor and assignee should seek legal counsel to ensure their interests are protected, and all documents are in order, further underscoring the importance of each document’s role in this pivotal real estate process.

Energy Performance Certificate (EPC) Requirements

Yes, an EPC is generally required for a lease assignment, especially if the building is to be sold or rented out. This certificate ensures that the property meets the necessary energy efficiency standards.

Registering an Assignment of Lease

Registration of an assignment of lease is crucial. It validates the change of tenant under the lease, making it legally binding and enforceable. This process usually involves submitting the deed of assignment to the appropriate land registry.

Timeframe for Assigning a Lease

Assigning a lease can take anywhere from a few weeks to several months, depending on factors like obtaining the landlord’s consent, the new tenant’s credibility, and the speed of legal processes.

Embracing the Benefits of Lease Assignment

Whether you’re a tenant seeking flexibility or a landlord desiring continued occupancy, lease assignment offers solutions that can cater to your individual needs, promoting ease and continuity in the leasing process.

If you’re considering a lease assignment, it’s paramount to seek professional advice to navigate the complexities involved. The information contained in this article should be used for information purposes only and should not be relied upon in place of specific legal advice.

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Tá an chuid seo den suíomh idirlín ar fáil i mBéarla amháin i láthair na huaire.

Stamp Duty and leases

• Residential houses and apartments

Agreements, assignments and surrenders

• Difference between a lease and a licence
• Paying Stamp Duty on residential leases
• Varying a lease
• Transitional arrangements

Agreement for lease

Instead of executing (signing, sealing or both) a lease, you may execute an agreement for lease. An agreement for lease sets out the terms that would be included in a lease.

You must pay Stamp Duty if the agreement is for:

• a period no longer than 35 years, or for an indefinite period
• any period over 35 years where you have paid 25% or more of the consideration in the agreement
• the lease of a residential house or apartment where the annual rent is €50,000 or greater.

You must pay Stamp Duty on the consideration and period set out in the agreement.

If the agreement was executed (signed, sealed or both) before 17 December 2023, please refer to Section 2.6 of the TDM Schedule 1 - Stamp Duties on Instruments for the previous thresholds.

Assignment of a lease

Leases are between a landlord and a tenant. If a tenant assigns (transfers) the lease to another person, Stamp Duty must be paid on the assignment. You treat an assignment the same way as a purchase of property.

Mary leases the premises in which she conducts her accountancy business from John. She entered into the lease in 2015. The period of the lease is 20 years. She pays €10,000 in rent each year.

Her business is doing well and she needs to move to a bigger premises. Tom agrees to pay Mary market value, that is, €20,000 to take over the lease.

The instrument (usually called a Deed of Assignment) to transfer the lease is executed on 2 February 2019. Tom pays Stamp Duty on this Deed. He pays Stamp Duty on €20,000. The Stamp Duty rate is the rate applicable to transfers of non-residential property.

Once the lease is assigned to Tom, Tom takes over all the obligations in the lease, for example, to pay rent to the landlord.

Surrender of a lease

A surrender of a lease is not the same as an assignment of a lease. Once you surrender your lease to the landlord, it ceases to exist.

For further information, please see Exchanges, partitions, releases and surrenders .

Next: Difference between a lease and a licence

Published: 28 March 2024 Please rate how useful this page was to you Print this page

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Stamp Duty on Debt Assignment

Home | Knowledge Center | Thought Papers Stamp Duty on Debt Assignment

13th Feb, 2018

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Introduction

Assignment of debt is one of the most common forms of transactions in financial markets. It essentially entails transfer of a debt from a creditor (assignor) to a third-party (assignee). One of the biggest challenges faced in debt assignment transactions in India is the significant stamp duty implication on the deed of assignment. Considering the volume of assignment transactions undertaken generally by banks and financial institutions or by asset reconstruction companies (“ ARCs ”), the stamp duty levied becomes a significant cost in such transactions. The Constitution of India (“ Constitution ”) confers upon the Parliament and each State Legislature the power to levy taxes and other duties. The subjects on which the Parliament or a State Legislature or both can legislate are specified in the Seventh Schedule of the Constitution. The Seventh Schedule is divided into 3 (three) lists:

• Union List;
• State List; and
• Concurrent List.

The Parliament has the exclusive power to legislate on the subjects enumerated in the Union List. The State List enumerates the subjects on which each State Legislature can legislate and such laws operate within the territory of each State. The Parliament, as well as the State Legislatures, have the power to legislate over the subjects listed in the Concurrent List.

The entry pertaining to levy of stamp duty in the Union List is as follows: -

“91. Rates of stamp duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts.”

The entry pertaining to levy of stamp duty in the State List is as follows: -

“63. Rates of stamp duty in respect of documents other than those specified in the provisions of List I with regard to rates of stamp duty.”

The entry pertaining to levy of stamp duty in the Concurrent List is as follows: -

“44. Stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty.” [emphasis supplied]

From the aforementioned entries, it is clear that the power to legislate on the rate of stamp duty chargeable on instruments of debt assignment (since it is not covered under Entry 91 of the Union List) is with the State Legislature. However, the power to determine whether stamp duty can be charged or not on a specific instrument is in the Concurrent List. In this regard, it may be noted that pursuant to the Enforcement of Security Interest and Recovery of Debt Laws and Miscellaneous Provisions (Amendment) Act, 2016 (“ Amendment Act ”), the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“ SARFAESI ”) and the Indian Stamp Act were amended to provide for an exemption from stamp duty on a deed of assignment in favour of an ARC.

As mentioned above, the power to legislate on whether stamp duty is payable or not on an instrument is in the Concurrent List. Therefore, the Parliament has the power to legislate on the aforesaid subject.

Pursuant to the Amendment Act, section 5(1A) was inserted in SARFAESI which provides that any agreement or document for transfer or assignment of rights or interest in financial assets under section 5(1) of SARFAESI in favour of an ARC is not liable to payment of stamp duty.

In several States, notifications have been issued for remission and/ or reduction of stamp duties on debt assignment transactions. For instance, in Rajasthan, the stamp duty chargeable on any agreement or other document executed for transfer or assignment of rights or interests in financial assets of banks or financial institutions under section 5 of SARFAESI in favour of ARCs 1 has been remitted. Further, in Maharashtra, the stamp duty on instrument of securitization of loans or assignment of debt with underlying security has been reduced to 0.1% (zero point one percent) of the loan securitized or the debt assigned subject to a maximum of Rs. 1,00,000 (Rupees one lac) 2 .

Certain State Governments, such as those of Rajasthan and Tamil Nadu have reduced the stamp duty based on the nature of the financial asset being assigned. In Rajasthan, the stamp duty has been reduced for assignment of standard assets whilst in Tamil Nadu, the stamp duty has been reduced for assignment of non-performing assets and assignment in favour of ARCs.

This paper discusses a recent decision by the Allahabad High Court in the case of Kotak Mahindra Bank Limited v. State of UP & Ors. 3 (“ Kotak case ”), where it was held that an instrument of assignment is chargeable with stamp duty under Article 62(c) (Transfer) of Schedule 1B of the Indian Stamp Act, as applicable in Uttar Pradesh (“ UP Stamp Act ”), as opposed to Article 23 (Conveyance) of Schedule 1B of the UP Stamp Act.

The stamp duty payable in various States under Article 23 or the relevant provision for conveyance is on an ad valorem basis whereas the stamp payable under Article 62(c) or relevant provision for transfer of interest secured, inter alia, by bond or mortgage deed, is a nominal amount. For instance, in Uttar Pradesh, the stamp duty payable under Article 62(c) is Rs. 100 (Rupees one hundred).

Decision in the Kotak case

In the Kotak case, Kotak Mahindra Bank Limited (“ Kotak ”) had purchased and acquired certain loans from State Bank of India (“ Assignor ”) along with the underlying securities.

The question for consideration before the full bench of the Allahabad High Court was whether the deed executed by the applicant with the underlying securities would be chargeable with duty under Article 62(c) or Article 23 of Schedule 1B of the UP Stamp Act.

The court observed that in order to determine whether an instrument is sufficiently stamped, one must look at the instrument in its entirety to find out the true character and the dominant purpose of the instrument. In this case it was observed that the dominant purpose of the deed of assignment entered into between Kotak and the Assignor (“ Instrument ”), was to transfer/ assign the debts along with the underlying securities, thereby, entitling Kotak to demand, receive and recover the debts in its own name and right.

Article 11 of Schedule 1B of the UP Stamp Act provides that an instrument of assignment can be charged to stamp duty either as a conveyance, a transfer or a transfer of lease. The court observed that since the Instrument was not a transfer of lease, it would either be a conveyance or a transfer.

The court referred to the definition of conveyance in the UP Stamp Act, which reads as follows:

““ Conveyance ”. — “Conveyance” includes a conveyance on sale and every instrument by which property, whether movable or immovable, is transferred inter vivos and which is not otherwise specifically provided for [by Schedule I, Schedule IA or Schedule IB] [as the case may be];” [emphasis supplied]

The court held that the term conveyance denotes an instrument in writing by which some title or interest is transferred from one person to other and that the use of the words “on sale” and “is transferred” denote that the document itself should create or vest a complete title in the subject matter of the transfer, in the vendee. In this case since under the Instrument, the rights of the Assignor to recover the debts secured by the underlying securities had been transferred to Kotak, it was held that the requirement of conveyance or sale cannot be said to be satisfied.

The court further observed that debt is purely an intangible property which has to be claimed or enforced by action and not by taking physical possession thereof, in contrast to immovable and movable property. Where a transaction does not affect the transfer of any immovable or movable property, Article 23 of Schedule 1B cannot have any applicability.

The court’s view was that since debt along with underlying securities is an interest secured by bonds and/ or mortgages, transfer of such debt would be chargeable under Article 62(c).

The court further clarified that under the Instrument, merely the right under the contract to recover the debts had been transferred. Since the borrower(s) had never transferred the title in the immovable property given in security to the Assignor, the Assignor could merely transfer its rights i.e. mortgagee's rights in the property to recover the debts. It was further observed that the Assignor never had any title to the underlying securities and that it merely had the right to enforce the security interest upon default of the borrower(s) in repayment. The right transferred to Kotak was primarily the right to recover the debts, in accordance with law, by proceeding against the underlying security furnished by the bonds/ mortgage deed(s).

Therefore, the court held that the Instrument was chargeable with stamp duty under Article 62(c) of Schedule 1B of the UP Stamp Act.

Whilst coming to the conclusion that assignment of debt would not constitute a conveyance, the court referred to the definition of conveyance to state that debt is an intangible property which has to be claimed or enforced by action and not by taking physical possession thereof, in contrast to immovable and movable property.

In this regard, it may be noted that there are various judicial precedents 4 , where it has been held that an interest (including mortgage interest) in immovable property is itself immovable property.

However, even assuming assignment of debt with underlying securities over immovable property amounts to a conveyance, it

may be pertinent to refer to the definition of conveyance in the UP Stamp Act which specifically excludes a conveyance which is otherwise provided for by the Schedule to the UP Stamp Act.

Article 62(c) of the UP Stamp Act reads as follows:

“62. Transfer (whether with or without consideration) – … (c) of any interest secured by a bond, mortgagedeed or policy of insurance--”

In view of the above, transfer of any interest secured by a mortgage deed, which is covered under Article 62(c), would be excluded from the meaning of conveyance and would be chargeable to stamp duty under Article 62.

In this regard it may be pertinent to refer to the definitions of ‘bond’ and ‘mortgage deed’ under the UP Stamp Act, which is as follows:

“" Bond " includes

(a) any instrument whereby a person obliges himself to pay money to another, on condition that the obligation shall be void if a specified act is performed, or is not performed, as the case may be;

(b) any instrument attested by a witness and not payable to order or bearer, whereby a person obliges himself to pay money to another; and

(c) any instrument so attested, whereby a person obliges himself to deliver grain or other agricultural produce to another

“" Mortgage-deed ". — "mortgage-deed" includes every instrument whereby, for the purpose of securing money advanced, or to be advanced, by way of loan, or an existing or future debt, or the performance of an engagement, one person transfers, or creates, to, or in favour of another, a right over or in respect of specified property;”

In view of the above, where a debt secured by a bond or a mortgage deed is assigned under a deed of assignment, the stamp duty payable on such deed of assignment will be under Article 62(c) of the UP Stamp Act or corresponding provisions of the Stamp Act of other States.

However, in cases of unsecured loans or loans secured by an equitable mortgage (where there is no mortgage deed), the deed of assignment would attract ad valorem stamp duty chargeable on conveyance, since the same will not get covered under Article 62(c) or similar provisions in other states.

The market practice until now has been to stamp the deed of assignment of debt under the relevant article for Conveyance in the applicable Stamp Act. In fact, in States such as Maharashtra, the State Government has issued notifications for reduction of stamp duty on a deed of assignment under the article for Conveyance.

The judgment passed by the Allahabad High Court in the Kotak case may prove to be a welcome step in reducing the incidence of stamp duty on debt assignment transactions. However, it would need to be seen whether in other States a similar view is taken by stamp duty authorities.

This update has been prepared by Aastha (Partner), Debopam Dutta (Managing Associate) and Abhay Jain (Associate).

1 Notification No. F4(3)FD/Tax/2017-110 dated March 8, 2017 issued by Finance Department (Tax Division) Government Of Rajasthan.

2 Notification No.Mudrank-2002/875/C.R.173-M-1 dated May 6, 2002 issued by Revenue & Forests Department, Government of Maharashtra.

3 Reference Against MISC. Acts. No. 1 of 2016, order dated February 9, 2018.

4 Bank of Upper India Ltd. (in liquidation) v. Fanny Skinner and Ors., AIR 1929 All 161. See also Prahlad Dalsukhrai and Ors. v. Maganlal Muljibhai Tewar, AIR 1952 Bom 454 and Harihar Pandey v. Vindhayachal Rai and Ors., AIR 1949 Pat 170.

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Assigning A Lease – How A Deed Of Assignment Works

When you’re entering or leaving a business premise as a tenant, it’s always good to check if you need to transfer a lease. In other words, if the owner is changing, you need to make this official with your tenant. 

This is known as ‘assigning a lease’ or ‘transferring a lease’. It occurs when you’re selling your business and the buyer agrees to be bound by the existing lease, or you’ve simply decided to move premises and have found another business willing to be bound by your current lease.

Essentially, when you assign your lease, you’ll be handing over the rights and obligations of that lease to another party . The last thing you want is to be liable for an old lease! 

This is also known as a Deed Of Assignment , which we’ve written about in more detail here . 

The Process Of Transferring A Lease

Transferring a lease doesn’t have to be a complicated process, so let’s break it down. 

1. Review The Existing Lease

First thing’s first – you’ll need to ensure that there aren’t any conditions on the lease that would stop it from being transferred. To do this, you might want to look at the terms of your lease, and even have a lawyer help you out with this step! 

2. Landlord’s Consent

Once you’ve determined that the lease is assignable, you’ll need the consent of the landlord in writing and identify what requirements you’ll need to fulfil.This can be different for each landlord, so make sure you and your landlord are both clear on what needs to be done. 

3. Discuss The Assignee

Now, you need to chat with your landlord about who will be taking over your premises, otherwise known as the incoming tenant. For example, you need to collect their name, contact details and relevant documents for the transfer. This might include documents to show their financial status, or their business experience. 

Once this is all taken care of, the landlord basically confirms their consent to the transfer, and the tenant also lets them know that they agree to it. This should be covered in what we call a Deed of Consent to Assignment . 

The assignee will also agree to inherit the rights under the existing lease from a certain date until the lease term ends. 

At this stage, it’s important for all parties to review the terms of the Agreement to ensure they are happy with what they need to do and for how long they will enjoy certain rights or interests in the lease. 

I’m The Outgoing Tenant – What Else Should I Do?

Once the landlord’s consent has been received, we can start putting together a Deed of Transfer of Lease!

This will officially release the tenant from any responsibilities or liabilities under the lease, but until this is official, you want to make sure you uphold your obligations. 

Retail Leases

If you’re transferring a retail lease, the steps you need to take might look a little different. You may want to take a close look at the Retail Leases Act 1994 , as this covers retail leases. 

For example, the following things might be worth considering:

• Under a retail lease, as long as you have provided proof that the incoming tenant has good financial standing, you can force the landlord to provide consent
• However, if the incoming tenant is not financially reliable, the landlord is under no obligation to provide consent

It’s important to understand what you can and can’t do depending on the type of lease you’re under. You can read more about transferring leases here . 

Whether you need one drafted or looked at, we’d love to help! You can reach out to our friendly team on 1800 730 617 or [email protected] for a free, no-obligations consultation about your specific situation and the legal documents that are right for you.

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General statement for transfer duty and leases

The creation and extinguishment of dutiable property which includes leases is dutiable unless exempt or excluded. Excluded items include the grant, renewal or variation of a lease for no consideration and any transactions prescribed by the Regulations. The regulation will be retrospective and will commence from the date of assent of the legislation which is the 19th of May 2022.

The Regulation and the Commissioner’s Practice Note (when published) will contain a detailed explanation of the duty consequences of lease transactions. Generally, leases where rent is paid or payable will not be liable for duty, provided there is no premium or other consideration for the grant of the lease.

Leases granted for consideration (monetary or non-monetary) will be liable. Please be aware that an excluded transaction that results in a change in beneficial ownership of dutiable property will be treated as a dutiable transaction if it is part of a scheme or arrangement to avoid or reduce duty.

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Stamp Duty Land Tax: transactions that don't need a return

Find out which property transactions are exempt from Stamp Duty Land Tax (SDLT).

You don’t pay SDLT if you buy a property in:

• Scotland from 1 April 2015 - you pay Land and Buildings Transaction Tax
• Wales from 1 April 2018 - you pay Land Transaction Tax (LTT)

You don’t need to tell HM Revenue and Customs ( HMRC ) about some land and property transactions which are exempt from SDLT . They include:

• transactions where no money or other type of payment changes hands
• property left to you in a will
• property transferred because of divorce or dissolution of a civil partnership

You don’t need to tell HMRC about some leasehold transactions either.

You need to tell HMRC about all other land and property transactions on an SDLT return .

Exempt transactions

Property transactions where no money or other type of payment changes hands.

You can give property or land away or transfer ownership to another person. If there’s no ‘chargeable consideration’ you don’t have to pay SDLT or file a return. The chargeable consideration is a payment that can be cash or another type of payment, including:

• works or services
• release from a debt
• transfer of a debt, including the value of any outstanding mortgage

Property left in a will

Property left to you in a will is almost always exempt from SDLT . This includes property that has outstanding debt on it, for example a mortgage.

It also applies to a transaction that changes the terms of a will within 2 years of someone dying. The transaction is exempt from SDLT as long as:

• a different beneficiary gets the property
• the new beneficiary doesn’t pay a compensation payment, this includes taking over a mortgage

Divorce or dissolution of a civil partnership

A transaction is exempt from SDLT when a couple divorce, separate or end their civil partnership, and they either:

• agree to split their property and land between them
• split the property under the terms of a court order

Find out about SDLT on land and property transfers and linked transactions .

Freehold property purchases involving transactions less than £40,000

You don’t need to pay SDLT or tell HMRC about freehold land and property transactions with a total chargeable consideration of less than £40,000, unless the total chargeable consideration includes any linked transactions .

Leasehold transactions you don’t need to tell HMRC about

Leasehold purchases with a lease of 7 years or more.

You don’t have to tell HMRC or pay SDLT when:

• you buy a new or assigned lease of 7 years or more, as long as the premium is less than £40,000 and the annual rent is less than £1,000
• you assign or surrender a residential or non-residential lease (granted for 7 years or more) and the chargeable consideration is less than £40,000

Leasehold property purchases where the lease is for less than 7 years

You don’t have to pay SDLT or tell HMRC if you buy a new or assigned lease of less than 7 years, as long as the chargeable consideration is less than the residential or non-residential SDLT threshold.

Chargeable consideration includes:

• any premium and the net present value of any rent in the case of a new lease
• the consideration given for the assignment or surrender of an existing lease

To work out the net present value (based on the average rent over the life of the lease) you can use the Stamp Duty Land Tax calculator .

Alternative property finance

Sometimes the financial arrangements for buying a property or land involve a secondary transaction with the lender. This follows on from the main transaction (for example when you follow Sharia law).

These later transactions may be exempt from SDLT where you meet specific conditions .

Updates to this page

From 1 April 2018 SDLT will no longer apply in Wales. You'll pay Land Transaction Tax which is dealt with by the Welsh Revenue Authority.

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Stamping and Registration of Lease Agreements: An Insight on Defaults

Stamp duty and registration of instruments has always been a complex and talked about issue. Several questions are usually asked by people, such as:

“ Why do we need to pay stamp duty on instruments?” 

“Why should one get lease agreements registered ?”  

We have come across several cases where individuals and corporate entities choose to ignore the requirements of payment of proper stamp duty and the registration of such instruments in accordance with applicable law. The circumvention of these mandatory laws often leads to serious complications at a later date, either when disputes arise between the parties or when the instrument is impounded by a government authority on account of a deficit in payment of stamp duty.

In this article, we have endeavoured to address certain important aspects in respect of the payment of stamp duty and the registration of leases and the risks involved in failing to do so.

• When does a lease agreement attract stamp duty?

For the execution of any lease agreement, stamp duty needs to be paid in the manner prescribed under the relevant stamp laws of the State in India where the property is situated. Stamp duty on such instruments is a ‘State Subject’ under the Constitution of India and therefore, the applicable stamp duty / rate may differ from State to State. Generally, stamp duty is chargeable on the basis of the tenure of the lease, the amounts of rent, premium and / or any other form of rent and premium which may be mentioned in the lease agreement proposed to be executed. In some Indian States, minimum circle rates have also been specified by respective State Governments. In such States, one is required to pay stamp duty either on the actual rent / premium amounts shown in the lease agreement or the minimum circle rates issued by the relevant state government – whichever is higher. For leases which are for a long term, stamp duty may be chargeable under the same category as a conveyance or sale of such property. Stamp duty is mandatorily payable on instruments mentioned in the Schedules of the applicable Stamp Acts of various States, unless specifically exempted by the relevant authority.

• Who has to bear the stamp duty?

If it has not been specifically agreed to in the lease agreement between the parties executing it, it is the responsibility of the lessee to pay the applicable stamp duty. 

• What happens if one does not pay the requisite stamp duty?

If proper stamp duty is not paid on lease instruments, any government authority competent to take evidence on oath can impound it and send it to the jurisdictional Collector of Stamps for adjudication and payment of proper stamp duty, along with a penalty which may extend up to ten times of the deficient stamp duty amount. Further, if in court proceedings, the court comes to the conclusion that the instrument is not properly stamped with applicable duty, it would not be admissible as evidence until the stamp duty (with penalties) as adjudicated by the Collector of Stamps is fully paid.

• When and why should a person register a lease agreement?

In terms of the Transfer of Property Act, 1882 and the Registration Act, 1908, leases of immovable properties from year to year or for any term exceeding twelve months or reserving a yearly rent requires mandatory registration at the office of the Sub Registrar of Assurances having jurisdiction over the location where the property to be leased is situated. In terms of the Registration Act 1908, an instrument which requires mandatory registration, should be registered within a period of four months from the date of its execution. An extension of an additional four months may be granted by the aforementioned Registrar, at his discretion, by levying a penalty of up to ten times the registration fee, provided such non-presentation of the instrument within first four months of execution was due to genuine reasons or unavoidable circumstances.

• What would happen if a lease agreement which requires registration is not registered?

If a lease agreement which requires mandatory registration is not registered by the parties, it cannot be received as evidence of any of the agreed terms and conditions affecting the leased property contained therein, whatsoever, except for certain limited purposes including, inter alia in suits for specific performance or merely as evidence of a collateral or correlated transaction.

• Would it make any difference if a lease agreement contains an arbitration clause?

If a lease agreement contains an arbitration clause, it would, as held by the Supreme Court of India in various judgements, be treated as a separate agreement between the lessor and lessee and the process of arbitration can be invoked by either party to such lease agreement as an arbitration agreement does not require any registration. However, the arbitrator would not rely on an unregistered lease deed for enforcement of any of the terms and conditions contained therein, except as evidence of contract in a claim for specific performance, or evidence of any collateral transaction which does not specifically require registration.

The content of this document does not necessarily reflect the views / position of Khaitan & Co but remain solely those of the author(s). For any further queries or follow up, please contact Khaitan & Co at  [email protected] .

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Stamp duty, attestation and registration of lease and agreements

This article is written by Adv. Priscilla Rodrigues, pursuing a  Certificate Course in Real Estate Laws  from  Lawsikho.com .

Table of Contents

Introduction

Buying a house is one of the most important financial choices anyone can make in their lives. It is a daunting financial as well as emotional experience where we need to recognise the property during the purchase of a home, make a down payment, apply for loan, sign the selling agreement etc. Thereafter comes the possession which is the actual transfer of the property but this is not enough as we will need to provide patented legal proof. To do this, you would need to get the property registered in the local municipal records in your name, with the seller reporting that the property is being sold. You’ll also have to pay a stamp duty at the time of registration which is a government tax imposed on property transactions. 

A lot of people however prefer not buying their own house due to various reasons as it suits their own financial ambitions and the lifestyles that they enjoy. Owning a home leaves you vulnerable to unexpected spending and distractions nibbling away at what’s available for investment. It can also restrict your mobility and your independence.

With leasing, you’ve got a planned, stable cost that you can schedule throughout the year. You wouldn’t have to neglect or skip job opportunities that come your way.

So, when you’re looking for or living in a rented house, apartment, or home, the same needs to be registered and stamp duty needs to be paid on it.

Stamp duty on lease agreements

Stamp duties are payable pursuant to Section 3 of the Indian Stamp Act, 1899. It is a tax paid to the government, similar to the income tax. Stamp Duty is payable in full and is to be paid on the deadline. If payment of the stamp duty is delayed, it will incur a fine. A stamp duty paying instrument or document is deemed to be a legitimate and legal document and can be admitted as evidence in court. Any document that is not appropriately stamped, cannot be admitted as evidence in court.

Stamp duty shall be paid in the manner specified by the applicable stamp laws of the State in India where the property is situated for the execution of any lease agreement. According to the Constitution of India, the stamp duty on such instruments is a ‘state issue’ and therefore the applicable stamp duty can vary from state to state. 

In general, the stamp duty is paid on the basis of the term of the contract, the amounts of the rent, the premium, and/or any other form of rent and premium that may be specified in the proposed lease agreement. Minimum circle rates were also defined by the respective State Governments in some Indian states. In such states, either the specific rent specified in the lease agreement or the minimum circle rates provided by the applicable state government which will be much higher are expected to be paid stamp duty. 

Why are rent agreements registered

Section 17 of the Registration Act 1908 makes it compulsory to register a lease agreement Section 17(1)(d) leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent;

This makes it imperative that immovable properties from year to year or for any period exceeding twelve months require compulsory registration at the office of the Assurance Sub-Registrar with jurisdiction over the place where the property to be leased is located. Both the parties i.e. the tenant and the landlord must be present together with two witnesses for attestation in order to register the deed. If all parties are not present together, he/ she must sign the Power of Attorney, giving the agent the authority to sign the agreement. 

The Registration Act, 1908 makes an instrument that requires mandatory registration to be registered within four months from the date of its execution The Registrar can, at his discretion, issue an extension of an additional four months by imposing a penalty of up to ten times the registration fee, given that such failure to present the instrument within the first four months.

Apart from the mandatory requirement that a lease agreement should be registered it also forms an important aspect in a landlord-tenant relationship. It not only facilitates the relationship between the parties but also preserves their interests. The landlord and the lessee must never compromise for an oral contract as it is not protected by statute, and should thus always rely on a written agreement being enforced.

Why is the rent contract for 11 months

We must have noticed that mostly rent agreements are made for 11 months. We may even wonder why that is so. This is mainly done so that the stamp duty and other charges could be avoided. Under the Registration Act, 1908, registration of a lease agreement is compulsory if the lease term extends 12 months. If an agreement is registered, the parties will have to pay stamp duty and the registration fee. If the agreement is made for 11 months it could save a few extra bucks and the time that the entire process of registration would take. 

Stamp duty on rent agreement in UP and Gujarat

The provisions of the Registration Act, 1908 makes it imperative that all the Rental Agreements are registered if you are making it for more than one year. 

Uttar Pradesh  

The stamp duty payable is governed by The U.P. Stamp Act, 2008.

The stamp duty to be paid on rental agreements are as follows:

• If the lease is to be for a term not exceeding three years; then the Stamp Duty will be 2% of the Annual Rent.
• where the lease is for a term exceeding three years but not exceeding five years then the stamp duty will be 2% of consideration equal to three times the amount or value of the average annual rent reserved.
• where the lease is for a term exceeding five years but not exceeding ten years; then the stamp duty will be 2% of consideration equal to five times the amount or value of the average annual rent reserved.
• where the lease is for a term exceeding ten years but not exceeding twenty years; then the stamp duty will be 2% of consideration equal to ten times the amount or value of the average annual rent reserved.
• where the lease is for a term exceeding twenty years but not exceeding thirty years or does not purport to be for any definite term; then the stamp duty will be 2% of consideration equal to twenty times the amount or value of the average annual rent reserved.
• where the lease is for a term exceeding thirty years or in perpetuity; then the stamp duty will be the same as a duty for Conveyance for a consideration equal to the market value of the property which is the subject of the lease.

Registration of the agreement

Once the agreement is made and signed and if the lease is for less than a year then the document can be attested from the Notary Public and if the lease is for more than a year then it needs to be registered at the Local Sub-Registrar to make it legally enforceable in case of a dispute. A Registered rental agreement retains more evidentiary force compared to Notarized rental agreement.

Documents required for the registration process

• One Original Identity Proof of Owner and Tenant.
• Two Passport Size Photograph of each-Owner and Tenant.
• Two Witnesses with their Original Identity Proof.

The stamp duty payable in the state of Gujarat is governed by the Gujarat State Stamp Act, 1958, which was based on the Bombay Stamp Act, 1958.

• If the lease is made for a term which is between 1 – 5 years then the stamp duty payable will be 1.50% of the average annual rent reserved.
• If the lease is made for a term which is between 1 – 10 years then the stamp duty payable will be 3% of the average annual rent reserved.
• If the lease is made for a term which is between Lease deed 1 – 15 years then the stamp duty payable will be 6% of the average annual rent reserved.
• If the lease is made for a term which is between 1- 20 years then the stamp duty payable will be 6% of the average annual rent reserved.
• If the lease is made for a term which is above 20 years then the stamp duty payable will be 6% of the average annual rent reserved.

A rental agreement written on a Stamp paper is not enforceable if not registered at a Sub-Registrar Office. Thus, one is required to record the same with a Sub Registrar office to make it legally enforceable in case of a dispute.

When a rental agreement is signed, both the landlord and the occupant should maintain full fairness in the best interests of both the parties. 

The rental agreements can be registered after the occupant moves in but should not be postponed anyway. The agreement can be registered either online or physically at the sub registrar’s office in Gujarat.

The Documents required for the registration process in Gujarat is the same as those required in Uttar Pradesh as elaborated above.

If we look at all the applicable laws in the country, we can see that for all agreements to be valid and enforceable in the courts of law they need to be attested and stamped appropriately executed. The same tax, however, would be as under the laws of the respective State. Where e-stamping facilities are provided for by State legislation, the same shall be used to advance towards the aim of a paperless economy. Whereas the value and legitimacy of e-agreements and e-stamping has yet to be accepted by some Governments. Both the state and central government are looking forward to making clear arrangements for e-agreements and e-stamping with a view to saving time and money and making business simpler.

The Indian Stamp Act, 1899.

The Registration Act 1908.

The U.P. Stamp Act, 2008.

The Gujarat State Stamp Act, 1958.

https://www.edrafter.in/rent-agreement-gurgaon.

https://legaldesk.com/documents/rental-agreement/up-noida.

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Henan boom gelatin vs. sunil healthcare limited, book option and assignment agreements : understanding key differences, freelancer rights and contracts : all you need to know.

UP Stamp Act 2008 is repealed by the Uttar Pradesh Stamp (Repeal) Act, 2019. However Schedule I-B, proviso to Article 35 (c) (i), which shall be applicable mandates that 2% stamp duty shall be payable where the lease purposes to letting of a building or flat for a term duly not exceeding five years.

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Articles > Commercial Property

How Can I Transfer or Assign a Commercial Lease?

June 7, 2021   Dean Wolman Philip Evangelou

In certain cases, a tenant can choose to exit their commercial lease prior to the end of their lease term by either transferring or assigning the lease to another party, known as the assignee. Transfers or assignment of leases require explicit permission for this mechanism in the original lease. Assuming it does exist however, this scenario usually occurs when a tenant sells their business to another party (who agrees to accept the current lease rather than entering into a new one with the landlord), or when a tenant wishes to exit their lease and finds a party willing to take on the existing lease. 

Process of transferring a Commercial Lease

The first steps involved in exiting a commercial lease and considering assignment include:

• Reviewing the current lease to determine whether it can be transferred or assigned; 
• Determining what requirements must be fulfilled to obtain the landlord’s consent; and
• Communicating with the landlord to obtain their consent to be able to assign the lease. 

The landlord must approve of the proposed tenant whom the existing tenant wishes to assign the lease to. The landlord will determine their approval by assessing whether the new tenant can pay rent as well as deciding if the new tenant is the appropriate fit. A landlord will generally ask that the proposed new tenant provides both financial and business references to perform this assessment. 

Deed of Assignment 

Once the landlord’s consent is obtained, a legal document known as a deed of consent and assignment will be developed. The deed of consent transfers all obligations of the current tenant under the existing lease, to the new tenant. 

A deed of consent includes:

• Confirmation of the landlord’s consent to transfer the lease 
• An agreement from the existing tenant to transfer their entire interest in the lease to the new tenant. This will include a specified date of transfer (date of assignment) 
• The new tenant agrees to undertake all rights and obligations of the lease from the date of transfer. 

The Current Tenant

For the successful transfer of a commercial lease, the current tenant must be relieved from all rights and obligations under the lease from the specified transfer date. To ensure this occurs:

• A deed of assignment will legalize the tenant’s relief from any claims or liabilities under the lease, from the date of transfer. 
• Any security provided by the exiting tenant will be refunded.

It is important to remember that the tenant is bound to the terms of the lease and is required to fulfill their obligations until the completion of the deed of assignment and subsequent formal transfer of the commercial lease. 

The Proposed New Tenant

The proposed new tenant’s approval to take on the commercial lease is dependent on the landlord’s acceptance of the lease transfer. This approval is specified in the deed of assignment whereby the landlord accepts the proposed new tenant as assignee from the specified date of transfer. Prior to entering the commercial lease, there are a number of things that the incoming tenant should consider. These include: 

• Reviewing the contents of the existing lease prior to signing the deed of assignment
• Ensuring that the terms of the lease are reasonable and that sufficient security and tenure is provided 

What happens if the lease being transferred is a Retail Lease? 

If the lease being transferred takes the form of a retail lease, the tenant will be required to give the new tenant (assignee) a disclosure statement. A disclosure statement will detail any changes agreed to by the landlord during the duration of the lease. 

The disclosure statement provides the assignee with information that is essential to consider including:

• The terms of release and any renewal options;
• proposed commencement date of the lease
• details of the premises; 
• the requirements to use the premises;
• Annual base rent payable under the lease; and 
• Outgoings payable under the lease 

A tenant is entitled to request an up to date disclosure statement prior from the landlord, prior to transferring the commercial lease. The landlord has an obligation to fulfill the tenant’s request. This must be provided within a specific time frame, usually 14 days after the tenant makes the request. 

Failure to provide a disclosure statement may result in consequences. However, these consequences often differ between states and territories. Consequences may include:

• The assignee withholding their rental payment;
• The assignee seeks compensation from the landlord; or
• The assignee terminates the lease prior to the end of the lease term.

Parties entering into a commercial lease must be aware of the specific requirements and consequences of disclosure statements, within their particular state. 

Do you need to pay stamp duty? 

In NSW it is essential that you pay stamp duty upon assigning a commercial or retail lease. Stamp duty is a tax imposed on the purchase of assets and transactions of property. The value of stamp duty required to be paid depends on whether there is any money involved in the transfer. 

Should the commercial lease transfer not involve any form of monetary payment, the exiting tenant is still required to pay the NSW Office of State Revenue a nominal $10 fee. It is essential that this stamp duty fee is paid to ensure that the transfer is accepted. 

Failure to pay this nominal stamp duty will delay the transfer of the commercial lease. 

What to take away from this article?

A tenant who wishes to exit their commercial lease can either transfer or assign this lease. It is essential that the tenant is aware of their rights and obligations under the lease and the process involved with transferring the lease to a proposed new tenant. Additionally, it is important to consider that a transfer requires the approval and consent of the landlord. Should the transfer take the form of a retail lease, there are a number of additional requirements that need to be fulfilled, including a disclosure statement. To ensure a smooth commercial lease transfer, it is imperative that you familiarise yourself with a deed of assignment and the requirements necessary for it to be satisfied. 

If you have any questions regarding the transfer or assignment of a commercial lease or require assistance with any aspect of commercial property, get in touch with us via the contact form or by calling 1300 337 997. 

About Dean Wolman

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Related Articles

Drafting a Deed of Assignment

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Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom. Also note: This is not legal advice.

Introduction

A Deed of Assignment is a vital legal document used to transfer rights, interests or assets between parties. It is regularly used in business transactions, and often regarding real estate or intellectual property. A well-crafted deed of assignment can protect both sides from potential legal disputes, ensuring that everyone involved understands their obligations and responsibilities.

The Genie AI team has seen many instances where having a valid deed of assignment can make all the difference - without it businesses could be exposed to considerable risk. That’s why we offer free templates and step-by-step guides to help those wishing to draft their own deed.

When creating a Deed of Assignment it is important to take the specific circumstances into account - any changes or additions should be accurately documented and agreed by all involved parties beforehand. Furthermore, it is essential that the terms are clearly written out in an unambiguous way so every party knows exactly what they have signed up for. Beyond protecting both sides’ interests, this type of agreement can also be used for copyright assignments, leases, debt transfers and trusts.

Before signing on the dotted line it’s also critical that executing such documentation is done properly - all parties must sign in the presence of a witness who will also affix their signature and date the document accordingly. Once this process has been completed filings must then be made with any relevant government authorities whenever necessary (especially in cases involving real estate or intellectual property transfers).

In summary, drafting a Deed of Assignment not only safeguards everyone’s best interests but also provides additional benefits depending on its use case - reading through our step-by-step guidance below should provide you with more information on how to access our template library today and start benefitting from its advantages without needing to sign up for an account with Genie AI first!

Definitions (feel free to skip)

Legal Binding: When a legally binding document is used, it means that all parties involved are legally obligated to follow the terms and conditions set forth in the document.

Assignor: The assignor is the person who is transferring rights, interests or assets to someone else.

Assignee: The assignee is the person who is receiving the rights, interests or assets from the assignor.

Witness: A witness is an independent third-party who is present when a document is signed, in order to ensure that the process is completed in a secure and legally binding manner.

Stamp: A stamp is an official seal or mark that is used to verify and authenticate a document.

Tax: A tax is a sum of money that is paid to a government or public authority.

Duty: Duty is an obligation or responsibility assigned to someone.

Defining the Deed of Assignment

What is a deed of assignment and what is its purpose, parties involved, who needs to be involved in the making of a deed of assignment, drafting the deed, determine what kind of deed of assignment needs to be drafted, consider the subject matter to be assigned in the deed, research the legal requirements for the kind of deed to be drafted, draft the deed of assignment in accordance with the legal requirements, executing the deed, check that the parties to the deed are correctly identified, confirm that the deed is correctly signed and dated by all parties, confirm that the deed is witnessed by an independent third party, have the deed of assignment properly executed by all parties, registration, determine whether the deed of assignment needs to be registered, if registration is necessary, confirm the registration procedures, take necessary steps to register the deed of assignment, considerations, consider any applicable tax or stamp duty implications of the deed of assignment, consider any restrictions or limitations on the rights being assigned, consider whether the deed of assignment needs to be registered in any public records, common mistakes, not accurately identifying all of the parties to the deed, not having the deed properly executed by all parties, not having the deed witnessed by an independent third party, not considering any applicable tax or stamp duty implications, not considering any applicable restrictions or limitations on the rights being assigned, record keeping, ensure that the original deed of assignment is securely stored, create a digital copy of the deed and store it in a secure manner, review the deed of assignment to ensure accuracy, confirm that all steps have been completed correctly, seek advice from legal professionals if necessary, get started.

• Establish the parties involved in the Deed of Assignment
• Identify the property or service being assigned
• Specify the terms of the assignment
• Ensure the Deed of Assignment is properly witnessed
• Check that all signatures are valid

When you have completed the steps above, you will have successfully defined the Deed of Assignment and can proceed to the next step.

• A deed of assignment is a legal document that is used to transfer the rights and responsibilities of one party (the assignor) to another party (the assignee)
• It is used to transfer contractual rights and obligations between parties
• It should include information such as the names of the parties, the date of the assignment, and the description of the rights transferred
• You will know that you have completed this step when you have an understanding of what a deed of assignment is and why it is used.
• Identify the party transferring their rights (the assignor) and the party receiving the rights (the assignee)
• Draft the deed in the name of both parties, including full names and contact details
• Ensure the deed is signed by both the assignor and assignee
• Once the deed is signed, the parties should exchange copies of the document

Once the assignor and assignee have been identified and the deed has been drafted and signed, you can check this step off your list and move on to the next step.

• Identify the parties involved in the Deed of Assignment. This would typically include the assignor (the party transferring their rights or interest) and the assignee (the party receiving the rights or interest).
• Ensure that all parties involved have the legal capacity to enter into a contract.
• When all parties have been identified and their legal capacity has been verified, you can check this step off your list and move on to drafting the Deed.
• Read the applicable laws in your jurisdiction to determine the required language and structure of the Deed of Assignment
• Gather the necessary information on the parties, the asset being assigned, and other relevant details
• Draft the Deed of Assignment, taking into account all the necessary details
• Make sure the language is clear and unambiguous
• Have the Deed of Assignment reviewed by a legal professional
• When the Deed of Assignment has been drafted and reviewed, you can move on to the next step.
• Identify the type of assignment that needs to be drafted and the legal requirements that need to be satisfied
• Consider the purpose of the Deed and the rights and obligations of the parties to the Deed
• Determine if the Deed is for an absolute or conditional assignment
• Consider if the Deed should be an express or implied assignment
• Determine if the Deed needs to be in writing or if it can be oral
• Check the applicable laws in your jurisdiction to ensure that you are drafting a valid Deed
• Check if there are any additional requirements that need to be included in the Deed

When you can check this off your list: Once you have identified the type of assignment and the relevant legal requirements, you can move on to considering the subject matter to be assigned in the Deed.

• Identify the subject matter of the Deed of Assignment, such as a patent, trademark, copyright, or other intellectual property
• Assess the value of the subject matter and any associated liabilities
• Understand the relationship between the assignor and assignee
• Have all necessary documents, such as a purchase agreement, to provide more detail about the assignment

Once you have identified the subject matter of the Deed of Assignment, assessed its value, understand the relationship between the assignor and assignee, and gathered any additional documents, you can move onto the next step of researching the legal requirements for the kind of Deed to be drafted.

• Research the relevant legislation, case law, and other materials related to the Deed of Assignment to be drafted
• Consult with a lawyer familiar with the relevant law to understand the requirements
• Take detailed notes on the legal requirements that must be adhered to in the Deed of Assignment
• Once you have all the necessary information, double-check that you understand the requirements before moving on to the next step.
• Prepare the text of the Deed, ensuring that all relevant information regarding the parties, the subject matter, and the consideration is included
• Check to make sure the language conforms with relevant laws and regulations
• Have the Deed reviewed by a solicitor to ensure that it complies with all legal requirements
• Once the Deed has been approved by a solicitor, have the parties sign the document
• Once the Deed has been signed by both parties, make multiple copies and ensure each party has a copy
• This step is complete once the Deed has been signed and each party has a copy of the document.
• Ensure both parties sign the Deed of Assignment in the presence of two witnesses who are over the age of 18 and not parties to the Deed
• Have both parties sign the deed in the presence of two witnesses and have the witnesses sign the deed to attest to witnessing the signature of the parties
• Check that the parties have signed the Deed in the presence of the witnesses by noting the signatures and the dates of signature in the execution clause of the Deed
• Once the Deed has been executed, have the parties date and keep a copy of the Deed in a secure place
• You will know that you have completed this step when the Deed has been properly executed by the parties in the presence of two witnesses.
• Identify all parties to the Deed and verify that their details are correct.
• Ensure that all parties to the Deed are identified in the document and that the details of each party are accurate and up-to-date.
• Check that the names, addresses and contact details of each party are correct.
• Once you have verified that the parties and their details are correctly identified, you can move on to the next step.
• Check that all parties have signed the Deed in the correct place, and that the date of signature is correct
• Ensure that each party has signed the Deed in the presence of an independent witness
• Check that all parties have signed the Deed with their full name and title, if applicable
• Confirm that the date of signature is correct and that all parties have signed on the same date
• Once you have verified that all parties have correctly signed and dated the Deed, you can proceed to the next step.
• Ensure that the Deed is witnessed by an independent third party who is not a party to the Deed.
• Ask the third party to sign the Deed and provide their name, address, occupation and date of signing.
• Check that the third party has signed and dated the Deed.
• Once the above is complete, you can check this step off your list and move on to the next step.
• Obtain signatures from all parties on the deed of assignment, ensuring that each party signs in the presence of a witness
• Have an independent third party witness each party’s signature
• Ensure that all parties have a valid form of identification, such as a driver’s license or passport, available for inspection by the witness
• Ensure that all parties sign the deed of assignment in the presence of the witness
• Obtain the witness’ signature, confirming that all parties signed in the presence of the witness
• You will know this step is completed once all parties have signed the deed of assignment and the witness has signed confirming they were present during the signing.
• Obtain a copy of the executed Deed of Assignment from all parties
• Contact the relevant state or territory office to determine whether the Deed of Assignment needs to be registered
• If registration is required, complete the necessary forms, pay the registration fee, and submit the required documents
• Once the Deed of Assignment is registered, the registrar will issue a certificate of registration
• Check off this step when you have received and reviewed the certificate of registration.
• Research the applicable laws and regulations in the relevant jurisdiction to decide if the Deed of Assignment needs to be registered
• Consult a legal professional if unsure
• When you have the answer, you can move on to the next step.
• Confirm what type of Deed of Assignment requires registration with the relevant government agency or registry.
• Research the registration procedures and the requirements you must meet in order to register the Deed of Assignment.
• Obtain any fees or additional documents that are necessary to complete the registration process.
• Ensure that all parties to the Deed of Assignment understand the registration process and the requirements for completing it.

You can check off this step once you have researched and confirmed the registration procedures for the Deed of Assignment.

• Gather the necessary documents for registration, such as the Deed of Assignment, supporting documents, and the applicable fee
• Visit the registration office to register the Deed of Assignment
• Submit the necessary documents to the registration office
• Pay the applicable fee
• Obtain a copy of the registered Deed of Assignment
• Upon completion of the above steps, you can check this off your list and move on to the next step.
• Review and understand the nature of the rights and obligations being assigned
• Determine if there are any restrictions or limitations in the assignment
• Assess if any approvals are needed from third parties before the assignment is valid
• Confirm that the assignor has the right to assign the interest being transferred
• Check to see if the assignee has the necessary capacity to accept the assignment
• Analyze if the assignment is subject to any applicable laws or regulations
• Determine if any additional documentation is needed to support the assignment
• Once you have considered all of the above, you can proceed with drafting the Deed of Assignment.
• Check with your local taxation authority or a qualified tax professional to see if the Deed of Assignment is subject to any taxes or stamp duty.
• Ensure that the Deed of Assignment includes any required taxes or stamp duty payments.
• Check to see if the tax or stamp duty implications vary by jurisdiction.
• Once you’ve considered the tax or stamp duty implications, you can move on to the next step.
• Identify any restrictions or limitations that could affect the transfer of rights in the Deed of Assignment
• Consider whether there are any legal restrictions that must be observed in the transfer of the rights being assigned
• Research any relevant industry standards or regulations to ensure that the restrictions or limitations on the rights being assigned are compliant
• Ensure that the Deed of Assignment clearly outlines the restrictions or limitations of the rights being assigned
• When all restrictions or limitations on the rights being assigned are taken into consideration, checked for compliance and outlined in the Deed of Assignment, this step is complete.
• Consider whether the Deed of Assignment needs to be registered with any government or public agencies.
• Determine if any registration is required or optional.
• Research the relevant regulations and laws to ensure that the assignments are properly recorded.
• Check any local requirements or restrictions.
• Once you have determined that the Deed of Assignment does or does not need to be registered, you can move on to the next step in the process.

• Read over the Deed of Assignment twice to make sure you’re accurately identifying all of the parties to the Deed. Make sure you include the full names and addresses of the assignor and assignee, as well as any other relevant parties. • Check that the legal description of the subject property is accurate. • Ensure that the consideration (the amount being exchanged for the assignment) is stated clearly and accurately. • Make sure that the names of the initial parties to the Deed are also included in the recitals. • Ensure that the recitals and the express terms of the Deed are consistent with one another. • Make sure that the Deed is signed, notarized, and delivered in accordance with state law.

Once you’ve completed the above steps, you can check off this task and move on to the next step in the guide.

• Identify the assignor and assignee. The assignor is the party transferring their rights and the assignee is the party receiving the rights.
• Check all of the details are correct. This includes the names, addresses and other contact information for both parties.
• Draft the deed to ensure that the assignor and assignee are accurately identified.
• You can check this off your list and move on to the next step once you have confirmed that the assignor and assignee have been accurately identified in the deed.
• Ensure that all parties to the Deed have read, understood and agreed to the terms and conditions of the agreement.
• Have all parties affix their signature to the Deed and the accompanying documents.
• Check that all the signatures are dated and in the presence of a witness.
• When all parties have properly executed the Deed, you can move on to the next step.
• Ensure all parties have signed the Deed in the presence of a witness.
• The witness must be an independent third party who is not a party to the Deed.
• The witness must sign each page of the Deed that contains a party’s signature.
• The witness must also include their full name, address and occupation on the Deed.
• Once all of the above requirements are met, then you can check this off your list and move on to the next step.
• Determine the applicable taxes or stamp duty implications for the Deed of Assignment.
• Research any applicable taxes or stamp duty fees for the Deed of Assignment.
• Calculate the applicable taxes or stamp duty fees for the Deed of Assignment.
• Make sure to include the applicable taxes or stamp duty fees in the Deed of Assignment.

Once you have determined the applicable taxes or stamp duty implications for the Deed of Assignment, and included them in the Deed of Assignment, you can move on to the next step.

• Determine the rights that you are assigning and review any applicable laws or regulations to ensure that the assignment of such rights is permitted.
• Consider any applicable contractual restrictions or limitations on the rights being assigned, such as any applicable confidentiality obligations or restrictions on the transfer of rights.
• Once you have determined that the assignment of the rights is permitted and there are no applicable restrictions or limitations, you can proceed to the next step of recording keeping.
• Create a record of the Deed of Assignment, including the date it was executed, by each party
• Maintain a copy of the Deed of Assignment in a secure place
• Record any additional related documents, such as any security documents, release documents, or other agreements
• When all of the above have been done, you can check this off your list and move on to the next step.
• Obtain a physical copy of the original Deed of Assignment
• Ensure the original Deed is signed by both parties
• Keep the original Deed in a safe and secure place, such as a locked filing cabinet or safe
• Make sure the document is stored in a location that is accessible to both parties
• Ensure that the original Deed is not destroyed or tampered with in any way

You can check this off your list and move on to the next step once the original Deed of Assignment is safely stored in a secure location.

• Scan or take a digital photo of the original Deed of Assignment and save it to a secure location.
• Ensure that the digital copy is readable and clearly displays all of the information contained in the original document.
• Ensure that the digital copy is stored in a secure location, preferably on a cloud-based storage system or other secure server.
• Make sure that only authorized personnel have access to the digital copy of the Deed.
• When finished, you will have created a digital copy of the Deed and stored it in a secure manner.
• Read over the Deed of Assignment to ensure accuracy
• Make sure all details are correct, and all parties are named
• Verify that all signatures are complete and accurate
• Make sure the date of the assignment is correct
• Check that the document is formatted and laid out correctly
• Once you are satisfied with the accuracy of the Deed of Assignment, you can move on to the next step.
• Read through the entire document to make sure all the information is correct
• Double check that the names and details of the parties involved are spelled correctly
• Ensure that all the dates are accurate, and that any and all parties have signed the deed in the right places
• Check that the terms and conditions in the deed are consistent with the agreement between the parties
• When you have verified all the details, you can check this off your list and move on to the next step.
• Check the Deed of Assignment to ensure that all required elements are present, including accurate information and signatures of all parties.
• Verify that any and all attachments to the Deed of Assignment are included and accurate.
• Ensure that all dates, signatures, and other pieces of information are accurate and up-to-date.
• Once you’ve confirmed that all of the steps have been completed correctly, you can move on to the next step.
• Seek professional advice from a lawyer or other legal professional to ensure that the deed of assignment is legally binding and enforceable.
• Request that the legal professional checks that all steps have been completed correctly, and that the deed of assignment meets all requirements under local law.
• Ask the legal professional to provide you with written advice on any changes or revisions that may be necessary to make the deed of assignment valid and enforceable.
• Once the legal professional has confirmed that the deed is legally sound, you can check off this step and proceed with the next one.
• Research legal professionals who are able to provide advice and assistance with the drafting of a deed of assignment
• Contact the legal professionals to discuss the specific requirements and details of the deed of assignment
• Ask the legal professionals if they are able to provide advice and assistance with the deed of assignment
• Receive advice from the legal professionals and make changes to the deed of assignment accordingly
• Once you are satisfied with the changes to the deed of assignment, you can move on to the next step.

Q: Does a Deed of Assignment need to be signed?

Asked by John on April 23rd 2022. A: Yes, a Deed of Assignment needs to be signed by both the assignor and the assignee in order for it to be legally binding. The signatures should be witnessed and dated, and should be in front of an independent witness who is not related to either party. It is also important to include the relevant clauses and provisions in the deed, as these will set out the rights and obligations of each party.

Q: What is the difference between an assignment and a novation?

Asked by Sarah on July 29th 2022. A: An assignment is a transfer of rights or obligations from one party to another, while a novation is a transfer of rights or obligations from one party to another with the consent of all parties involved. An assignment does not necessarily require the consent of all parties, while a novation always requires the consent of all parties. Additionally, an assignment can transfer rights or obligations without necessarily extinguishing any pre-existing agreements, while a novation extinguishes any pre-existing agreements.

Q: Is a Deed of Assignment legally binding in different jurisdictions?

Asked by Tyler on October 17th 2022. A: Yes, a Deed of Assignment can be legally binding in different jurisdictions, though the exact requirements for validity may differ from jurisdiction to jurisdiction. In general, however, a Deed of Assignment needs to be signed by both parties and witnessed by an independent third party in order for it to be legally binding. Additionally, the deed should include all relevant clauses and provisions that are applicable in each jurisdiction.

Q: Are there any tax implications when drafting a Deed of Assignment?

Asked by Emma on January 15th 2022. A: Yes, there are tax implications that need to be taken into account when drafting a Deed of Assignment. Depending on the jurisdiction and specific tax laws, there may be tax implications for both parties if they are transferring rights or obligations under the deed. It is important to seek professional tax advice before entering into any agreement that involves transferring rights or obligations between parties as this could have significant financial implications for all involved.

Q: Do I need legal advice when drafting a Deed of Assignment?

Asked by Jacob on June 5th 2022. A: While it is not necessary to seek legal advice when drafting a Deed of Assignment, it is generally recommended in order to ensure that all relevant legal requirements are satisfied and that all involved parties are aware of their rights and obligations under the deed. It is also important to make sure that all language used in the deed is clear and unambiguous so that it can easily be understood by all parties involved.

Q: How can I ensure that my Deed of Assignment is valid?

Asked by Michael on August 28th 2022. A: In order for your Deed of Assignment to be valid, it must meet certain legal requirements which vary between jurisdictions. Generally speaking, your deed should include all relevant clauses and provisions applicable in your jurisdiction as well as signatures from both parties which should be witnessed by an independent third party who is not related to either party involved. Additionally, any language used within the document should be clear and unambiguous so that it can easily be understood by all involved parties.

Q: What information do I need to provide when drafting a Deed of Assignment?

Asked by Ashley on November 10th 2022. A: When drafting a Deed of Assignment, you will need to provide information about both parties involved such as their names, addresses, contact details and any other relevant information required under applicable laws in your jurisdiction. Additionally, you will need to include any relevant clauses or provisions applicable in your jurisdiction which will set out the rights and obligations of each party under the deed as well as any other information required for the document to be legally binding.

Q: What are common mistakes made when drafting a Deed of Assignment?

Asked by Joshua on February 20th 2022. A: One common mistake made when drafting a Deed of Assignment is failing to include all relevant clauses or provisions applicable in your jurisdiction which set out the rights and obligations of each party involved in the agreement. Additionally, failing to have the document signed by both parties or witnessed by an independent third party can render the document invalid or unenforceable under applicable law in some jurisdictions. Moreover, using ambiguous language within the document can also lead to misunderstandings and disputes further down the line which could be avoided if clear language was used throughout the document instead.

Example dispute

Lawsuit referencing a deed of assignment.

• The plaintiff may raise a lawsuit if they have been wronged by the defendant in a way that is outlined in the deed of assignment.
• For example, the deed of assignment may outline that the defendant is responsible for paying a certain amount of money to the plaintiff, and the defendant has failed to do so.
• The plaintiff may also raise a lawsuit if the defendant has failed to adhere to any other obligations laid out in the deed of assignment.
• The plaintiff would need to prove that the defendant has breached the deed of assignment in order to win the lawsuit.
• If successful, the plaintiff may be able to obtain a judgment in their favor, which may require the defendant to pay the plaintiff the money they are owed.
• In addition, the plaintiff may be able to seek other damages, such as punitive damages, if the breach of the deed of assignment was particularly egregious.
• Depending on the severity of the breach, the plaintiff may also be able to seek an injunction to prevent the defendant from continuing to breach the deed of assignment.
• Settlement of the dispute may also be possible, wherein the defendant agrees to pay a certain amount of money to the plaintiff, or agrees to adhere to the obligations laid out in the deed of assignment.

Templates available (free to use)

Deed Of Assignment For Rent Deposits Occupation Lease Deed Of Assignment Of Benefit Of Claim For The Freehold Or Extended Lease House Under Section 8 Or Section 14 Deed Of Assignment Of Equitable Interest In Residential Land Deed Of Assignment Of Goodwill And Intellectual Property Rights Transfer Of A General Partnership To An Llp Deed Of Assignment Of Property Sale Benefits [Section 42 Deed Of A

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• Australia: Leases and stamp duty in NSW

Australia: Leases and stamp duty in NSW

Revenue nsw issues practice note on the interpretation of the new beneficial ownership rules in the context of leases, share by email.

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Since the amendment of the Duties Act 1997 (NSW) (" Duties Act ") on 19 May 2022, industry have awaited the release of guidance on the interpretation of the change in beneficial ownership rules. The Chief Commissioner (" Commissioner ") of State Revenue issued a new practice note (CPN 027) in November 2022 setting out the Commissioner's interpretation of the new rules, insofar as they apply to leases ( CPN 027: Leases and change in beneficial ownership | Revenue NSW ).

Key points to note are as follows:

• Leases: Leases for premiums are already dutiable. However, grants of leases other than those for premiums can now also be dutiable. This is because the new 'change in beneficial ownership' rules encompasses the creation an extinguishment of dutiable property, which in turn includes the grant of a lease in land in NSW (unless there is an exclusion or an exemption). The Commissioner takes the view consideration for the grant of the lease includes monetary consideration and/or the value of the non-monetary consideration.
• Monetary consideration includes any amount paid or payable by the lessee for the grant of the lease. This does not include amounts paid or payable for the right to use the land being rent or rent reserved. Therefore, leases for rent only will remain outside the duty net. The Commissioner will generally not require a valuation where the lease is granted for monetary consideration and the duty will be calculated on the consideration paid or to be paid.
• Non-monetary consideration is very fact dependent and will ultimately depend on a proper characterisation of the form and substance of the arrangement. The Commissioner indicates it can extend to obligations to undertake improvements.
• Improvements: The Commissioner considers that non-monetary consideration can be provided by a lessee where the lessee is under an obligation to undertake improvements to the land and the improvements are to become the property of the lessor at the end of the lease. Where a lessee undertakes to build on the lessor's land, duty may be assessed on the value of the improvements. In this context, the Commissioner sets out a scale referable to the length of the lease, determining the proportion of the construction cost which will be subject to duty. Where the term of the lease is less than 10 years, 100% of the cost of improvements will be taxed. If a taxpayer does not wish to use the scale, they may tender evidence of value.
• Works in lieu of rental payments: Where a lessee agrees to undertake landlord's works in lieu of rental payments, the Commissioner may treat that non-monetary consideration as taking on the characteristic of a non-dutiable payment of 'rent reserved'.

Example 5A: The Landlord grants XYZ Pty Ltd a 15-year lease of an industrial building. The consideration for the use of the premises under the lease is a prepaid rent of AUD 15 million. There is no separate consideration for the grant of the lease. The lessee can satisfy the obligation to pay rent by either the payment of cash, or by the construction of improvements with an agreed value of AUD 20 million. In either case, if there is an early termination of the lease (other than through the default of the lessee), the lessee is entitled to a proportionate refund. No duty is payable even if the lessee constructs the improvements, as it takes the character of prepaid rent.

• Transfer of a business: Where in a transfer of business, a lease over the business premises is not simply transferred to the new owner of the business but there is a cancellation of the old lease and the grant of a new lease, the Commissioner indicates that duty will be payable as if there were an assignment. 
• Early termination of a lease: Duty will apply where there is early termination of the lease by the lessor if the lessor pays the lessee in order to have the lessee vacate the premises.
• Lessee agreeing to pay lessor's legal fees: Where in consideration for the grant of a lease, the lessee agrees to pay the lessor's legal fees which are non-refundable and greater than AUD 1,000.00, duty will apply. 
• Attornment: The attornment of leases on a sale, is also potentially dutiable.  Where land is sold subject to leases and under the law of real property, the leases are attorned such that they become leases between the new owner and the lessee, duty potentially applies. This is quite a radical change, the legal basis of which is not clear. We expect that industry would welcome further guidance on the basis of the position put forward by the Commissioner.
• Expiration of a lease: Where fit out and fixtures of value are not removed/severed from the property at the end of the lease, they can be subject to duty unless provided for no consideration. The Commissioner provides the following examples in this regard:

Example 4:   A grants a lease of NSW land to B for a term of five years. B defaults on the rental payments. At the end of the 5-year term, B surrenders their rights in some fixtures and fit out on the leased premises in exchange for the release of a debt equivalent in value to the surrendered items. The surrender of the fixtures and fit out will be liable on the value of the fixtures & fit out.

Example 5:  A leases three floors of a commercial office tower in NSW from B for 10 years. The lease includes a provision that requires the lessee to remove all fit out and fixtures at the expiration of the lease. At the end of the lease the lessor allows the lessee to leave without removing the carpet, office partitions etc. No duty is payable on the expiry of the lease.

• Taxpayers can apply for a private ruling if a transaction is not covered under the CPN or if there is any doubt that a transaction could be liable to duty. This may be a prudent pathway for some taxpayers given the potential uncertainties raised by the CPN.

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• Tourist Attractions
• Tourist Attractions in Russia
• Novgorod Oblast Tourist Attractions

Veliky Novgorod

The whole city of Veliky Novgorod is a big museum; there are many well-preserved monuments dating back to the 11th century and later centuries.

Veliky Novgorod attractions

Novgorod kremlin, trade side and yaroslav’s courtyard, st. george's monastery, vitoslavlitsy museum of wooden architecture.

Request a private tour, tailor-made for individuals and small groups to meet your needs and preferences.

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• Private trip from St. Petersburg
• Visit Novgorod Kremlin and the Cathedral of St. Sophia
• Explore Yaroslav’s Court with its medieval churches
• Pick-up and drop-off at your hotel

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is it en route from moscow to st petersberg?

2 replies to this topic

Are you familiar with the concept of geographic maps?

Veliky or Nizhny?

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Veliky Novgorod Region: Why you need to see the jewel in Russia’s ‘Silver Necklace’

Valday Iversky Monastery

For those of you making the trip to Veliky Novgorod Region, here is a list of unmissable activities and places of interest to really get you acquainted with the area and its history.

1.    Learn the history of the Russian state in Veliky Novgorod

Of course, this city is unmissable; being the historical center of Russian statehood with the most ancient cathedral in the country, Sophia Cathedral, erected more than one thousand years ago, is a place of power for the whole of Russia. The city was the first-ever Russian settlement straddling both sides of a river (Volkhov), with the imposing Kremlin on one side, and medieval churches and buildings in the historic market district on the other.

Veliky Novgorod Kremlin

You can spice up the historical tour with various custom ones available, including the ancient cemetery at night or an alco-tour of the city (where you get to try local food and drink). For more information on the city excursions, you can go here .

2.  Explore traditional folk craft at the workshop in Kresttsy settlement

Krestetsky stitching is a traditional Russian pattern - a folk craft that was born and developed in this area since the 1860-s. In Soviet times a small factory producing original unique linen products was built here. During Perestroika it was nearly closed due to the catastrophic economic crisis in the country. The risk for the Krestetsky stitch being completely forgotten was quite real. It is now a private factory and shop with guided tours.

NOVGOROD REGION, RUSSIA - JANUARY 24, 2019: Linen products of the Kresttsy Stitch clothing factory reviving and implementing the Kresttsy stitchery, a traditional local embroidery technique dating from the 1860s, in the village of Kresttsy, Novgorod Region

The pattern is very beautiful and difficult to master, so the possibility to observe the birth of a masterpiece is quite unique. Head over to the factory website for more details.

3.  Meet the old believers in the village of Lyakova

Russia’s so-called ‘old believers’ did not accept the reformation of Orthodox Christianity in Russia in the 17th century, choosing instead to keep the old traditions in church services and rites, in defiance of the state’s persecution, lasting centuries. Old believers are divided into two groups, those who accept the church hierarchy and those who do not accept priests at all, pray in their own houses, and are governed by the community leaders. At this time there are about one million old believers scattered around the country with no official statistics to confirm that figure.    

The old believers of Lyakova village will gladly welcome you in the old traditional peasant’s house, explaining how it was organized, and how life, in general, looked in the distant peasant past.  This immersion is accompanied by a traditional dinner with borsch, salo (pork scratchings) and tea brewed in a traditional samovar. Book your ticket here .

4.  Take the eco-trail at the Valdai national park 

This national park is one of the largest specially protected natural areas in the European part of Russia. Russian president Vladimir Putin has one of his ‘datchas’ here. The territory of the park that covers an area of 159 thousand hectares includes several lakes (Borovno, Valdai, Velje, Seliger) as well as rare animals and plants.

Many nature lovers come here to hike, swim in the lakes and camp. This year the big eco-trail was opened. If you enjoy hiking, you can walk all 59 kilometers in five days, starting from the town of Valdai and covering around 12 kilometers a day. On the way, you will have all the facilities needed for camping and spending time in nature, from toilets to camping equipment and various amenities. Visit the park’s website for more info.

5.   Visit the Valday Iversky Monastery

Located on an island 10 kilometers from the town of Valday, this monastery appears to be floating on the lake, when you look at it from a distance.

This is a male Orthodox monastery established in 1653. It was one of the three monasteries founded by the Patriarch Nikon (his reformation of the Orthodox Church in Russia and its unification with the Greek Orthodox church caused the split between ‘old’ and ‘new’ believers). The icon of the Mother of God – Iverskaya – is the treasure of the monastery and the reason for the active pilgrimage to this place.

6. Ring the bells at the Valday Museum of Bells

The region of Novgorod was the center of Russian statehood under the rule of the Rurikovich dynasty. After the collapse of Kievan Rus’, the region was an autonomous Russian state with a republican form of government, the symbol of which was a big Bell that every citizen could ring in order to gather the townspeople for a vote or resolve a community issue. So it is not by accident that the first-ever Museum of Bells in Russia was opened here.

Valday Museum of Bells

If you manage to get Nadezhda Yakovleva for a guide, you are guaranteed a one-person performance along with your historical facts, it’s fascinating and great fun as well.

 7.   Immerse yourself in 10th-century life at the settlement in Lyubytino village

This village of ancient Slavs has been restored in order to give tourists the impression of life centuries ago. Different types of Russian wooden cottages (izba) are represented here, as well as utility buildings and the ancient burial mounds, used by Slavs for burial rites.

Lyubytino is an urban locality (a work settlement) and the administrative center of Lyubytinsky District of Novgorod Oblast, Russia, located on the Msta River. Municipally, it serves as the administrative center of Lyubytinskoye Urban Settlement

For those seeking total immersion, there is the possibility of getting dressed in the traditional clothing of the time and have a photo session.

 8.   Visit the museum of local lore in the town of Borovichi

This is one of the oldest museums in the region, established in 1918, and located in a 19th century stone house with a mezzanine. It is devoted to the history of the region from the Stone Age to the Revolution of 1917.

By the end of the 19th century, Borovichi became an industrial city that attained fame in Europe due to the first international agricultural handicraft and industrial exhibition held here, which was established under the auspices of the Prince of Oldenburg, who underlined the importance of this region between the two Russian capitals. France then presented half of the items at the exhibition.

The region is also known for a unique material produced here: Franco-Russian pyro-granite plants of Prince Golitsyn were located in Borovichi, and the recipe for producing it remains secret to this day. This material got a large silver medal at the World Exhibition in Paris in 1889.

We highly recommend that you take a guide here, as there are many activities including role play and various fun games, as well as just beautiful stories told during it. Find out more here .

If you need some guidance in the area, feel free to address the Rus Novgorodskaya touristic center.

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