Beware national lease registration system

Victorian landlords and tenants should be slow to embrace the draft Uniform Torrens Title Act that has just been published.

At present there is no requirement in Victoria to register leases and s.42(2)(e) of the Transfer of Land Act 1958 provides that the interest of a tenant in possession of land is an exception to the rules regarding indefeasibility of title: in effect the interest of a tenant in possession is protected when land is sold despite the lease not being registered.

The non-registration of leases in Victoria has worked well and landlords and tenants have not had to bear the cost of establishing and maintaining a registration system. Under the draft Act the exception to indefeasibility will apply only to leases of not more than 3 years (s.34(1)(g)). Many real estate agents will be delighted by the change because one of their complaints is that it is difficult for them to determine "market rents" in the absence of a database of leases.

However, I have not heard any compelling arguments for registration of leases in Victoria. If registration is required, landlords and tenants can expect delays in the Titles Offer and inevitably rising registration fees. Apart from the national "neatness" argument, the proponents of lease registration seem to have difficulty in pointing to its benefits. The draft Act is the product of the Property Law Reform Alliance.