Keeping our clients informed is important to us so we regularly publish our thoughts on topics that will be of interest to anyone involved with commercial property. We call them ‘insights’ and we hope you find them of interest.
BEWARE OF THE MONTHLY TENANCY – It may be longer than you think
We have mentioned this aspect of the Retail Shop Leases Act in the past, but feel that now would be a good time to reiterate the position as we understand it.
- If you allow a tenant into possession, accept rent, and they remain longer than six months without a formal Lease agreement, a five (5) year Lease is automatically created at law under Section 20B (with only a few minor exceptions).
- Probably on the same terms as the monthly tenancy (ie. no rent reviews).
- No specific right for the landlord to sue for damages.
- No specific obligation for the tenant to insure against public risk.
- No specific obligation for the tenant to maintain fixtures and fittings
The only way to avoid this uncertainty is to arrange for a formal written Lease to be executed by the parties, or to ensure that the tenant obtains a certificate from a lawyer excluding the provisions of Section 20B.
If you would like a bit more information, we have prepared an Information Sheet which sets this out in more detail, so just send us an email and we will forward one to you.
RECEIVE INSIGHTS TO YOUR INBOX
- Changes to the Retail and Commercial Leases Act - July 2020
- Code of Conduct "Leasing Principles"
- Why would you give a tenant a Right of Renewal?
- Air Conditioners
- CPI% v 3% fixed increases
- Monthly Tenancies - BEWARE
- Default Interest on late Rent payments
- Registration - How we approach it
- A Business name as Lessee?
- What if a tenant stops paying rent?