New Zealand: Signing An Agreement To Lease? Then This Article Is A ´Must Read!´

Last Updated: 29 November 2006
Article by Joanne Chilvers

The traditional New Zealand 'do it yourself' (DIY) attitude is alive and well when it comes to commercial leasing. There are plenty of people, both landlords and tenants, who are prepared to sign an agreement to lease premises for, say, a six year term at $50,000 plus a year rent without consulting a lawyer.

This article is intended to alert people to the potentially disastrous consequences which can result from a DIY approach to leasing and expose some fallacies behind people's reluctance to consult with a lawyer first.

A typical leasing scenario is as follows:

The landlord has an empty space and instructs an agent to find a tenant. The tenant sees the agent's advertising, inspects the premises and negotiates on what appears to be the most important aspect ­- the annual rental. This is agreed between the landlord and tenant, at which stage, the agent produces a two page agreement to which both parties give a cursory glance and then sign.

The first stage at which problems appear is when the landlord decides that the arrangement needs to be formally documented and instructs its lawyer to prepare a formal deed of lease. The result is a 20 plus page document, delivered to the tenant for signing. At this stage, a tenant usually decides that they do not understand most of the document and had better seek legal advice.

The tenant's lawyer then points out a few innocent looking sentences in the signed agreement which state that the parties agree to enter into a deed of lease in the Auckland District Law Society (ADLS) 4th edition form, or on the landlord's standard form. A tenant, when signing the agreement, will not usually know what terms are included in an ADLS or landlord standard form.

The result is that, by signing an agreement containing the above sentence, the tenant is bound to accept 40 plus clauses in the deed of lease. This includes extensive maintenance and repair obligations that the tenant either did not think about or assumed was the landlord's responsibility. Under the ADLS 4th edition form, the tenant is obliged to repaint and redecorate when reasonably necessary, regardless of the state of the premises at commencement of the lease or of fair wear and tear. In addition there are various outgoings which the tenant has to pay for.

The tenant is also obliged to pay the landlord's solicitor's costs of preparing the deed of lease. These can range from $450 upwards to $1,500, plus GST, depending on the complexity of the lease.

Nasty surprises aren't the sole domain of the tenant either. It is not unusual for agreements to be signed when the landlord doesn't actually have any legal interest in the property (ie has forgotten that the property is owned by a family trust not the landlord personally), or where the landlord has granted a sublease for a longer term than its own lease. Also, in cases where the landlord is subletting, it is important any agreement is made conditional on the headlandlord granting its approval. Sometimes, when subleasing, a landlord agrees to renew the headlease if the subtenant requests it, even though the landlord's real intention was to exit the property rather than to renew. These issues are often not considered in the midst of negotiations, but result in the landlord being in breach of contract when it cannot lease to the tenant what was promised.

Another problem with DIY agreements is lack of certainty. Items such as penalty interest rates and rent improvements percentages are not considered by parties when signing an agreement, yet, when it comes to finalising the deed, the landlord naturally wants rates as high as possible, while the tenant wants them low. A lawyer specialising in commercial property leasing is trained to notice such omissions and uncertainties and bring them to the parties' attention.

Given the significant problems outlined above, why do landlords and tenants regularly not seek legal advice prior to signing an agreement?

One reason is, of course, the perceived cost. Neither the landlord or tenant want to incur legal fees. However, this is unavoidable. It is cheaper to involve a lawyer at an early stage and have an agreement that reflects both parties' intentions and understanding and prevents disputes, rather than get a lawyer involved once problems arise. By then problems are usually time consuming to fix. Even bigger cost savings are available for a tenant. A lawyer can assist in negotiating the deletion of the obligation to pay the landlord's legal fees and some of the more onerous maintenance and outgoings requirements. These savings to the tenant will usually far exceed the cost of legal fees.

Another reason is timeliness. Parties are eager for " the deal to be done " and there is often additional pressure created by the agent. A tenant, in particular, can often be discouraged from taking time to seek legal advice due to perceived competition from other potential tenants, whether real or not. This argument is no longer valid with today's technology. A draft agreement can be emailed or faxed directly from the agent to the lawyer and, provided it is a usual leasing situation based on standard forms, the lawyer can usually advise the same day. In the long run, it is easier to take more time at the beginning to accurately record the parties' agreement than waste time later resolving disputes.

The final reason is probably due to ingrained DIY mentality. People regularly sign agreements to purchase residential property without consulting their lawyer first, often for amounts of more than $400,000. Compared with that, a short-term lease for considerably less money seems simple and imparts a false sense of confidence. Leasing property is considerably more complicated than buying. When you own a property, you can treat it however you wish (subject, of course, to the Council and your bank) and you know exactly what costs you are responsible for. When leasing a property, you are subject to extensive restrictions which vary according to the terms of the lease, along with an extensive list of outgoings which are often contracted for by the landlord but which the tenant has to pay.

Drafting agreements to lease commercial property is a specialised area that relies on training, experience and continual updating of current law. Each leasing situation is invariably different and will require an agreement drafted to fit the situation and the parties' intentions. A specialist lawyer can quickly review a proposed agreement and alert parties to any potential problems or recommend amendments for the benefit of his/her client thus saving the client considerable costs in both time and money at a later stage.

Consult your commercial leasing lawyer before you sign an agreement, NOT after.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.