Landlord and Tenants rights under the “no access in emergency” clause 27.5 of the Auckland District Law Society Lease 6th edition 2012.
The COVID-19 Level 4 lockdown has made it illegal for businesses with non-essential services to remain open. This in turn has forced Landlords and tenants alike to look at their Lease terms.
For those that have Leases entered into under the 2012 edition, much focus has turned on clause 27.5.
The main components of this clause are:
2. Inability to gain access
3. Inability to be fully operational
4. Whether there ought to be a cessation/ suspension of payment by the tenant of a fair proportion of rental and outgoings
The current COVID-19 Pandemic would appear to be an “emergency” falling within the wider definition of “Emergency” in the 2012 6th edition however the clause was not drafted with this intention and is yet to be “tested” in court.
In an emergency of this magnitude and where neither party is at fault, adopting extreme stances will not achieve anything for either party.
Both tenant’s and lawyers need to take a reasonable and fair approach to each other.
Accordingly, the key question facing tenants is what constitute a fair proportion of rent.
There is no definition of this in the lease and according to the authors of the clause, this omission was deliberate; there is no “one size fits all” formula as what might be fair for one tenancy may not be for another; each tenancy will turn on its own facts and will no doubt involve consideration of various factors including but not limited to such things as the term of the lease, the location and type of premises, the rent payable, the business use, the renewal rights, and the overall relationship with landlord.
There are still numerous tenants and landlord’s with leases under the pre -2012 edition who would be looking too at their lease terms to understand where they stand in the face of the Covid-19 Pandemic. The position of the pre-2012 leases provide for suspension/abatement of rent allowed only where a tenant was unable to have access due to partial damage or destruction of the premises.
Pending decision on when the lockdown would end and even if it is brought to level 3, what services may be permitted, it is best that both the tenant and the landlord in their respective landlord/ tenant relationship meet to discuss to negotiate what would constitute a reasonable compromise given that neither party has brought this about- to keep a completely open mind and communication lines open ; parties may wish in the interim to wait and see , or otherwise agree on something that would work long term ; in every situation for parties to be open to review as matters progress.
If you are a tenant or a Landlord affected by the COVID-19 lockdown ( whether under the 2012 provisions or its predecessor version , and wish to understand your rights and obligations particular to your lease, please contact our Commercial Law team on (09) 279 9351 or send us a request online for a 20 minute free consultation.
Please note that this advice is based on current information and could very well change quickly as the government and other agencies make further recommendations.