Signing an Agreement to Lease is often a long term commitment
for both the landlord and the tenant, and it pays to have the terms
checked by a lawyer before you sign.
Since the earthquakes, commercial leases in NZ have become
increasingly complicated, and while it may be tempting to sign an
Agreement to Lease with no legal review, the Agreement to Lease you
sign usually contains a clause which binds you to the terms of a 20
plus page Deed of Lease. What this means is that in signing an
Agreement to Lease, you are signing up to a range of commitments
(reinstatement, maintenance, repair, access for works by the
landlord etc) which may not suit your particular needs – and
could be expensive and inconvenient!
One (of many) points to note is that the commonly used Auckland
District Law Society (ADLS) Lease allows for the termination of the
lease in the event of a natural disaster where the damage caused by
that disaster "totally destroys" the premises, or
partially destroys the premises and the premises cannot be rebuilt.
Until the most recent version of the ADLS lease this was the only
provision the landlord and tenant could rely on in terms of damage
or destruction of the premises.
An issue that came to light in the wake of the Canterbury
earthquakes was premises being inaccessible due to reasons of
public safety (although the premises themselves were undamaged or
were able to be repaired under the provisions of the lease).
The most recent version of the ADLS Lease now provides that in
the case of an emergency where a tenant is unable to access the
premises to operate their business due to public safety (including
a restricted access cordon, prohibition on the use of the premises
pending completion of structural or other reports and appropriate
certifications by the relevant Council or authority, and
restriction on the occupation of the premises by the relevant
Council or authority) then a fair proportion of rent and outgoings
shall cease to be payable from when the tenant could not access the
premises until the tenant is again able to fully conduct its
business from the premises.
Of course, as many people are aware, the central city red zone
was inaccessible by both tenants and landlords for much longer than
anticipated. The second part of the "no access"
provisions in the new ADLS lease now provide for a set "no
access" period. The default period is 9 months, and at the
expiry of this period where the premises still remain inaccessible
either party may terminate the lease by giving 10 working days
When drafting a lease some thought is required as to whether
this 9 month default period should be amended to a longer (or
shorter) time frame. This will depend on the term of the lease, the
renewals availiable and the rental involved as well as whether you
are the landlord or the tenant – the tenant may want a
shorter time period and the landlord may want a longer time
There are many things to consider when signing up an Agreement
to Lease and we are happy to talk through the various legal issues
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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