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LETS GET DOWN TO BUSINESS.

Question :
We’re a relatively new business in a high lease cost area. Because it’s new, we have worked without drawing an income, but the money-in vs money-out has only just started to fall on the right side of the ledger when this hit. We are not getting any relief from the landlord as we have a Agreement to Lease, not a Deed of Lease – so the No Access clause does not apply. We’ve been advised to “talk to the bank” but we are very reluctant to go further into debt to save a business that (although it was starting to come right) wasn’t profitable. The nature of our business means we will be one of the last to open. We don’t have any reserves left and our priority is supporting our family. My question is; does it simply come down to how accommodating your landlord is? The impression that we get is that if your landlord isn’t awesome, you’re up the creek without a paddle… Thank you experts, we really appreciate all that you’re doing! 

Question submitted 18/04/20 @ 11:36am
Industry: Legal
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  • Hi, does your agreement to lease state that the parties will enter into the ADLS sixth edition lease? If so, then the terms of that lease (including the No Access clause) still apply.

    Unfortunately there are some landlords who are strictly enforcing what’s in their lease so in a way it does come down to how accommodating your landlord is. However, Landlords and tenants are being encouraged to come to arrangements during this period and you may need to engage your lawyer to assist as it seems your landlord isn’t coming to the party (sometimes a lawyer-to-lawyer conversation can help parties come to a resolution) – ultimately a landlord is entitled to enforce the terms of the lease (as can a tenant) but the consequences of that probably won’t be in the best interests of either party at this time (time, cost, uncertainty and practical ability to enforce).

    The Government announced this week proposed changes to legislation to give relief to tenants and landlords – click here for a useful summary.

    Hi agree with Averill,

    Clause 4 of the agreement to lease normally says:

    4.1 The Tenant shall enter into a formal lease with the Landlord to be prepared by the Landlord’s lawyer using the current Auckland District Law Society Inc Deed of Lease form amended in accordance with the provisions of this Agreement (“Lease”). Each party will pay their own costs of the negotiation and preparation of the Lease and any deed recording a rent review or renewal.

    4.3 Notwithstanding that the Lease may not have been executed, the parties shall be bound by the terms, covenants and provisions contained in this Agreement and in the Lease as if the Lease had been duly executed.

    If so, as Averill says, then the terms of that lease (including the No Access clause) still apply.

    Phil

    We have a tenant in the same situation (have only signed a AtL). We’ve given them a no strings attached 50% rent abatement while in lockdown and where they cannot trade.

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