I recently saw an enquiry from a business owner about leaks in their premises. What do they do about this? Can they force the landlord to repair the leaks? The good news is that the business owner has a lease and that lease will most likely require the landlord to ensure the premises are weathertight. But, we won’t know for sure unless we review the lease.
For many businesses, a premises lease can be their biggest overhead and liability. Even if the named tenant is a company, most landlords will require personal guarantees from the owners so the practical effect is the same – tens or hundreds of thousands in liability every year.
The purpose of a lease is to create the landlord/tenant relationship and state clearly the respective obligations of each of those parties. Most leases in New Zealand are drafted using the standard Auckland District Law Society/Real Estate Institute form. This is great because it means that it is quicker and more cost effective for parties and their lawyers to prepare and advise on leases. However, there are often special clauses added for particular premises and situations.
Lawyers can help add value to businesses by reviewing leases before they are signed. We can point out inconsistencies, fishhooks and unnegotiated inclusions before it’s too late. A tidy, fair lease means less risk for tenants and more value to a business if it is being sold.
If you’re considering entering into a commercial lease we can help.
Photo by Khachik Simonian on Unsplash