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Variation of leases

Can a lease be varied?

A lease, being a contractual agreement, can be varied by way of a supplementary agreement between the parties. If considering a variation of lease, it is important to determine if it will operate:

  • to vary the existing lease; or
  • as a surrender of the existing lease and a regrant of a new lease under the varied terms.

Varying a lease under general law

Under the general law, it was formerly considered that any variation of a lease represented a surrender of the existing lease and the creation of a new lease. However, there has been a subsequent softening of the surrender principle. Whether a variation of lease constitutes a variation of the existing lease or a surrender of the existing lease and a regrant of a new lease, is now a question of fact as to the intention of the parties. The nature and extent of the variation is also a relevant consideration. A trivial variation may be held to be a variation while extensive and significant variations may result in a finding that the original lease has been surrendered. Pascoe-Webbe v Nusuna Pty Ltd (1985) 3 BPR 9620 at 9622; Richmond Football Club Ltd v Verraty Pty Ltd (2011) VCAT 2104.

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