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Question :
Commercial tenancy laws

Hello

We’ve got new landlords as of December who have terminated our old lease, it had expired and was on month to month. We were supposed to vacate by end of March and they were only willing to let us stay if we pay more than double what we were paying and pay for all their legal fees. The amount they want us to pay is much more than the market rate. The minimum they want to charge is a 50% increase in rent.

They have also fixed future rent increases (at ridiculous prices might I add) that will not be subject to the market rent review process. While I know they are being incredibly unfair, I want to continue operating my business and there are no other suitable premises at this time. There have been law changes to residential properties but I’ve found very little about commercial tenancies. Is there anything that could help me with this situation? Landlords have too much power and in this situation they are being opportunistic.

The lease is not signed yet, there is nothing currently in place but I have paid them the months rent. They are trying to stop me from trading although they have received rent

Question submitted 08/04/21 @ 09:57am
Industry: Legal
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    Hi Tangy

    I am not a property lawyer, however in general there are very few protections for commercial tenants, particularly if your lease has expired or been terminated.

    To get a clear answer on this I’d recommend getting a property lawyer to have a look at the terms of the lease and the notice of termination, to confirm whether the termination is valid. There are some property lawyers on Manaaki that may be able to assist.

    Regards

    Averill

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    Hi Tangy,
    Averill is right – if your lease has validly expired, and you are negotiating with the landlord for a new lease, the landlord can dictate the terms and the rental rates, just as it can decide not to lease at all. If the landlord is seeking rent that is above market rates, it may think that it will be able to achieve that rate (if there is, relative to demand, a lack of that type of premises in your area, that may be the case), or it might be aware that you don’t have an alternative and are using that as leverage. Regardless of the reason for their approach, there is no protection for commercial tenants at law that prevents a landlord from taking that approach. Commercially, you could choose to call their bluff and advise that you are not willing to lease on those terms in the hope that they will soften their terms, but if that does not work it will see you without premises. You may want to engage a commercial real estate agent to give you some advice on what other premises are available and the current state of the rental market.
    From what you have said, it seems your lease term had expired when they bought the premises, that you were “holding over” on a month-to-month basis, and that they then gave you notice ending that “holding over” effective at the end of March. As Averill notes, there may be scope to argue that valid notice wasn’t given, but we would need to look at the correspondence on that to advise.
    You mentioned also that you have paid some rent but they are trying to stop you from trading. What period was the rent that you paid for? What are they doing to stop you from trading? Again, you may have an argument that there has been agreement to allow you to stay beyond March while you negotiate but again it depends on the context and correspondence.
    We would be happy to give you a high-level view on this if you want to contact me on amanda.spratt@minterellison.co.nz.

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