landlord obligations

We have identified below some of the obligations that are often not complied with:

Notices about Renewals and Options

  • In the case of leases with further terms, Section 26 of the Retail Leases Act 2003 requires Landlords to provide Tenants with a notice of the date when the option for a further term is no longer exercisable.
  • In the case of leases with no further terms, Section 64 of the Retail Leases Act 2003 requires Landlords to provide a formal notice to the Tenant that the Landlord is offering a renewal of the lease on certain terms or does not propose to offer a renewal of lease.

Both notices must be provided at least 6 months and no more than 12 months before that date. If a notice is not provided, then the lease will continue until the expiry of 6 months after the notice is provided (even if this date is after the term ends). However, if there is an option for a further term and that option is exercised, the renewal will commence on the date the previous term expires (not the expiry of the 6 month period).

In either case, the notice must be prepared carefully and properly served on the Tenant. Merely sending the notice by post may not be sufficient if there is a dispute as to whether the notice was received by the Tenant. Where possible, the notice should be hand delivered to the Tenant and an acknowledgement signed of receipt of the notice.

Notices about outgoings

When outgoings are collected regularly based on estimates, Section 46 of the Retail Leases Act 2003 provides that a landlord must give the tenant a written estimate of the outgoings at least one month before the start of each accounting period (i.e. yearly).

Section 47 of the Retail Leases Act 2003 provides that a landlord must prepare a written statement of all outgoings paid during the previous accounting period (i.e. year) and provide it to the Tenant within 3 months after the end of the relevant accounting period. This statement must be accompanied by a report prepared by a registered company auditor except where the outgoings statement relates only to GST, water, sewerage and drainage rates and charges, municipal council rates and charges and insurance AND is accompanied by copies of assessments, invoices, receipts or other proof of payment for all expenditure in the statement.

 

For expert advice on retail leasing matters contact Frank Tisher or a member of our Retail Leases Expert team.