Under section 27.6 of the current ADLS type tenancy, each party may terminate the lease within the required time frame if the tenant does not have access to the premises rented for a certain period of time due to an emergency. The standard non-access period for the ADLS lease is 9 months. The government has strengthened its response to coronavirus at Level 4. As a result, all non-essential stores are now closed at 11:59 p.m. on March 25, 2020, for at least four weeks. In these unprecedented times, commercial leases are in the spotlight. As these provisions show, ADLS leases have very good provisions for the fair and equitable distribution of expenses between tenants. A tenant who wishes to avoid payment under the tenancy agreement may try to argue frustrated by the lease, i.e. that, as a result of the blockage, the performance of the lease has become impossible or radically different from that previously agreed upon by the parties. The temporary nature of the blockage probably means that this would not be an event of frustration.
Given the high threshold required to argue frustration, this allegation should be carefully considered before doing so. We recommend that the parties turn their attention to the terms of their leases and contact (if not already done) the amount of leased and outgoing payments in the coming months. This « no access » clause in the ADLS lease provides for a temporary stoppage of a fair share of rent and expenses when a tenant`s premises are not accessible in an emergency. The landlord or tenant also has the right to terminate the tenancy agreement if the non-access persists for an extended period with a period of nine months. Commercial leases generally provide that building expenses (rates, insurance and other expenses) are charged to the tenants of the building. The usual form of commercial real estate leasing is the Auckland District Law Society Lease (« ADLS Lease »). The first schedule of the ADLS rental includes the possibility of taking a share or a percentage of the exits from the building to the tenant. This provision, which covers a percentage of departures, also refers to the specific conditions of the lease. In the end, leases must in any event be subject to scrutiny to determine the extent to which the payment obligation exists and whether parties wishing to terminate their leases can in fact do so properly.
The Auckland District Law Society`s standard rental budget, which is the « go-to-to- » contract for national landlords, has a crucial clause that was introduced in 2012, after the effects of the Christchurch earthquake on commercial tenants had. Note, however, that custom or obsolete leases (before 2012 ADLS) may not include this clause. The new form is more user-friendly and has a more modern language. It is also fairer between the landlord and the tenant. We see this new form as an improvement over its predecessor. However, it would be unwise to consider the standard form as a « one-size-fits-all form. » If you are considering entering into a lease or lease, we strongly advise you to seek legal advice before that date.