Most Read Contributor in New Zealand, February 2017
Under an ADLS lease a tenant is obligated to maintain the
premises to the same condition that the premises were in at the
commencement of the lease, fair wear and tear excepted. This
includes a requirement for the tenant to reinstate any alternations
or additions they might have made to the premises over the life of
the lease; for example if a doorway has been walled over, the
landlord can require that the accessway is re-opened when the lease
Our client's query centred around the fact that the more
recent versions of the ADLS lease use the terminology that a
"new lease" is entered into when a lease is renewed, when
it might otherwise be assumed that the current lease is simply
being extended for a further period.
In our client's case the lease ran for an initial period of
6 years, and the tenant then had a right to renew the lease for
another 3 year period. The landlord wondered whether, if the lease
was renewed and the final 3 years passed, did the tenant have to
reinstate the premises back to the condition it was in when the
lease originally started 9 years ago, or had a new
'benchmark' been set at the 6 year renewal.
The answer is that the tenant was required to reinstate the
premises back to the condition it was in when the lease commenced 9
years ago. The reason for this is that the tenant's maintenance
obligations require them to reinstate the premises to the condition
it had been in at the "commencement date". The
"commencement date" was a defined term under the lease
and was clearly recorded in the lease's First Schedule.
The tenant was required to repair damage which the tenant or the
tenant's invitees might have caused by their specific use of
the premises, but was not required to reinstate damage caused only
by fair wear and tear i.e. damage caused by natural ageing or the
tenant's ordinary use of the leased area.
Please note that the situation is different if the carpet or the
interior walls need to be replaced or repainted. A standard ADLS
lease allows a landlord to require a tenant to re-carpet or repaint
whenever the landlord considers that such work is reasonably
necessary. This is the case even if these items become dated or
worn solely through fair wear and tear.
As commercial leases often have a long life-span, it can be
difficult to remember what condition the premise was in when the
lease originally commenced. We therefore strongly suggest that a
landlord and tenant agree on a detailed record of the premise's
starting condition, including taking photos if possible. The latest
version of the ADLS Deed of Lease allows a landlord and a tenant to
attach a "Premises Condition Report" to the lease
document for this express purpose.
As an aside, it is also very important that any renewal of the
lease is carefully recorded in writing. We can assist with the
preparation of the required document which is known as a Deed of
Renewal of Lease. If the renewal is not recorded in writing, then
you could face an argument that the lease was not properly renewed
and has instead reverted to a month-to-month tenancy.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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A lessee will need to demonstrate that the genuine interests of the lessor will be protected if relief is granted.
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