Commercial Property Leases – What’s Fair During Covid-19?

With the Covid-19 Level 4 lockdown now in place, we’re receiving queries from both commercial property landlords and tenants seeking to clarify their obligations during this unprecedented event.

There is no “one size fits all” answer, and this will depend on the wording of your particular lease.

For those with leases using the Auckland District Law Society (ADLS) 6^th edition Deed of Lease form, the tenant can cease paying the full rent from 26^th March 2020 under the “no access in emergency” clause 27.5 on the basis that the Covid-19 Level 4 lockdown is a “restriction on occupation of the premises by any competent authority” preventing access to premises.

If your lease agreement is in a different form, it is unlikely that there will be a “no access in emergency” clause.

Every lease is different and from a practical perspective, both parties should engage in discussions around what each party considers a “fair proportion” of rent would be in this situation. Some tenants will be paying no rent, others will be paying a percentage, depending on the particular situation.

We encourage all parties to enter into discussions as this this situation is affecting almost all commercial landlords and tenants throughout the country.

For more help, contact our team of experts.