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25 April, 2013 | Peter Smith
This article provides an overview of the major changes from the previous edition of the lease. Follow up articles in the next few weeks will provide a more in-depth review of each of those changes.
Previous editions of the Lease have distinguished between the landlord’s premises and the landlord’s fixtures and fittings. The definition of “premises” has been changed to include all of the landlord’s fixtures and fittings. This change also affects the “maintenance” and “defects” provisions of the lease.
The outgoings list in Schedule One has been amended to reflect changes frequently made although no material changes have been made. These changes are:
It is now mandatory for the landlord to assess the portion of outgoings that apply to each tenancy in the building (where the entire building is not held as once tenancy) where they are not separately assessed.
A CPI (Consumer Price Index) rent review provision has been included in the First Schedule either as an alternative to or in addition to the market rent review. Subsequent provisions in the lease dealing with rent review calculations have also been amended to take this into account.
Market rent reviews are no longer the default method on a renewal. Either market or CPI can be selected.
Actual Rent Review dates must be set out, not just shown as “on renewal”.
There is now a default position as to what penalty interest is payable by the tenant for non-payment of rent and/or outgoings if no default interest percentage has been provided for in the lease. This is consistent with amendments that have been made to the Auckland District Law Society/Real Estate Institute of New Zealand form of Agreement for Sale and Purchase of Real Estate.
The lease now provides that each party will bear their own costs in relation to the negotiation and preparation of the lease. The previous edition provided that these costs were to be met by the tenant.
The tenant’s maintenance provisions have been tidied up and are now clearer. There is now also a provision for a “condition report” to be attached to the lease as evidence of the condition of the premises at the commencement date. This is optional but recommended.
The landlord is now required to keep the building “weatherproof” in addition to other maintenance items.
The landlord has always been required to maintain all of the buildings services however the term “building services” has been re-defined.
Building services that cannot be maintained in good order through maintenance are required to be replaced by the Landlord if “reasonably” required.
These provisions have now been grouped together which makes sense.
There is a time period by which the tenant is to reinstate the premises which is no later than the end of the lease term or earlier (if the lease is terminated before the end of the lease term). Previous editions of the lease were unclear as to whether reinstatement could take place after the end or earlier termination of the lease.
The insurance provisions have now been grouped together and minor amendments have been made in relation to the landlord’s insurance.
Specific amendments were not made as a result of the Christchurch earthquakes so landlords in this jurisdiction will need to tailor their insurance requirements in the lease.
Any provisions implied under the Property Law Act 2007 no longer apply. Some of these provisions that were previously implied are now expressly provided for in the lease document itself.
20 March, 2012 | Peter Smith