Commercial Leasing: Practice and Pitfalls
Must Do's In Commercial Leasing
With the general acceptance of the Auckland District Law Society commercial lease throughout the country landlords, tenants and commercial land agents can become a little complacent at the time they enter into a new lease.
When entering into an agreement to lease, the parties are agreeing to be locked into the terms and conditions of the standard form. Without reviewing its appropriateness for their circumstances, this can lead to unintended consequences.
The post-global financial crisis era has seen good landlords and tenants working together in their mutual best interests to ensure from the landlord’s perspective that their building is well let to a solid tenant, and from the tenant’s perspective that they have a building fit for purpose that they are able to profitably occupy.
The Christchurch earthquakes highlighted deficiencies in the standard form and led to it being reworked. Issues such as seismic ratings, no-access periods and remedial works were scarcely thought of in the past.
Sustainability and the move towards energy efficiency and green star design ratings can add to a property’s desirability. The new Health and Safety Legislation will add another layer of onerous responsibility onto landlords.
Potential tax implications, overseas investment issues being inadvertently triggered, and the complexities of leasing a building “off the plan” all require additional care and thought. Simple things such as who is responsible for keeping the building weather tight, maintaining the insurance for plate glass windows and payment of outgoings can lead to some confusion and may require that the standard form be amended.
For both landlord and tenant we recommend that you talk to a member of our team prior to signing an agreement to lease.
Peter Twigg, Partner
