University of Technology Sydney · FACULTY OF LAW

70317 Chap.10 Lease Assignment, Termination and Forfeiture

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Chapter 10 of 13 · 70317

Lease Assignment, Termination and Forfeiture

Assignment and privity

When a tenant assigns a lease, the original landlord and tenant stay bound by privity of contract for the whole term. The landlord and the assignee are linked by privity of estate, which carries only covenants that touch and concern the land, the rule from Spencer's Case and P & A Swift.

Two ways to end a lease

Forfeiture and re-entry is the property remedy.

Where the lease is silent, s 85(1)(d) of the Conveyancing Act implies the power; for rent, it arises once rent is a month in arrears with no notice required by s 129(8), while other breaches need a s 129(1) notice. Damages are limited to rent in arrears.

Termination for repudiation or breach of an essential term is the contract remedy, which can support loss of bargain damages.

Waiver

Accepting late rent waives that breach, so only current breaches support forfeiture.

In this chapter

What this chapter covers

  • 01

    Privity of contract and privity of estate

  • 02

    Covenants that touch and concern the land

  • 03

    Forfeiture and re-entry under s 85(1)(d)

  • 04

    Rent breaches and s 129(8)

  • 05

    Non-rent breaches and s 129(1) notices

  • 06

    Waiver by accepting rent

  • 07

    Repudiation, fundamental breach and Gumland

Worked example · free

Choosing between re-entry and termination for repudiation

Q [4 marks]. AskSia-authored practice. A Hornsby landlord leases a shop for six years at $15,000 a quarter payable in advance; the lease is silent on re-entry and does not make rent an essential term. The tenant paid late twice and the landlord accepted the payments. The quarter's rent due on 1 October is now five weeks overdue. Advise the landlord. The marks shown are an AskSia study allocation, not an official University marking scheme.
Who is bound to whom after an assignment.Who is bound to whom after an assignment. The solid line is privity of contract between the landlord and the original tenant, which lasts for the whole term; the dashed diagonal is privity of estate, linking the landlord to whoever currently holds the lease, here the assignee.privity of contractassignsprivity of estateLandlordOriginal tenantAssignee
Who is bound to whom after an assignment. The solid line is privity of contract between the landlord and the original tenant, which lasts for the whole term; the dashed diagonal is privity of estate, linking the landlord to whoever currently holds the lease, here the assignee.
  • 1The rent covenant is breached; the earlier late payments were accepted, so those breaches are waived.
  • 1Rent is more than a month in arrears, so s 85(1)(d) implies a right of re-entry, and s 129(8) means no notice is needed.
  • 1Rent is not an essential term here, and intermittent catching up does not show repudiation (Shevill).
  • 1Advise re-entry, the quicker and cheaper route, and a claim for the $15,000 in arrears.
The landlord should forfeit by re-entry for the rent breach and recover the arrears. Loss of bargain damages would need repudiation or a fundamental breach, which these facts do not show.
Sia tip — Ask two questions in order: is there a breach, and does that breach give a right to end the lease now?
Glossary

Key terms

Privity Of Estate
The relationship between the current landlord and the current tenant, through which covenants that touch and concern the land are enforced.
Assignment
The transfer of a tenant's whole remaining interest under a lease to a new tenant.
Repudiation
Conduct showing that a party is unwilling or unable to perform a contract substantially as agreed.
FAQ

Lease Assignment, Termination and Forfeiture FAQ

Does an assignee have to keep every promise in the lease?

No. An assignee is bound through privity of estate only by covenants that touch and concern the land, such as rent, repair and use clauses. A promise that gives the landlord a purely personal benefit, like the free lunch in the Week 8 tutorial problem, is unlikely to pass to the assignee.

What must a landlord do before forfeiting for a non-rent breach?

The Exercise 4 feedback lists three requirements: the breach must have continued for two months, the landlord must serve a notice complying with s 129(1) of the Conveyancing Act, and the tenant must have failed to comply within a reasonable time. Easily remedied breaches rarely end in forfeiture.

What damages can a landlord get after re-entry?

Only the rent in arrears, because forfeiture brings the lease to an end. Loss of bargain damages for the rest of the term require termination for repudiation or breach of an essential term, as discussed in Shevill, Progressive Mailing House v Tabali and Gumland, and failure to pay rent alone rarely amounts to that.

Does accepting late rent affect a landlord's rights?

Yes. When a landlord accepts rent after a breach, that breach is waived and cannot later support forfeiture. The Exercise 4 feedback explains that earlier late payments the landlord accepted are therefore irrelevant; only the current failure to pay can found a right of re-entry, and repeated catching up also tells against repudiation.

Study strategy

Exam move

Draw the privity square before every assignment problem and mark which link each claim uses. For termination, practise the five checks from the marking feedback in order, and keep a short table of rent and non-rent requirements. Read the three asterisked termination cases for their facts, so you can compare the seriousness of a problem's breaches with the conduct in those cases.

The Exercise 4 feedback on the use clause rewards a second reading: practise making arguments on both sides of whether a change of business breaches a permitted-use covenant.

Working through Lease Assignment, Termination and Forfeiture in 70317? Sia is AskSia’s AI Law tutor — ask any 70317 Lease Assignment, Termination and Forfeiture question and get a clear, step-by-step explanation grounded in how 70317 is taught and assessed. Read this chapter free, then take your hardest questions to Sia.

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