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Home / Business

<i>Property problems:</i> Lease terms the starting point for any dispute

20 May, 2004 04:21 AM4 mins to read

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Q. I own a multi-tenanted industrial complex at Mt Maunganui.

My father has been managing it for me while I am overseas and he has allowed one of the tenants to place a large container over part of his carpark and part of the access way.

I'm returning home and want to get the container moved from the site or charge them for leaving it there. Can I do this?

A. The first step in solving any dispute between landlord and tenant is to refer to the provisions of your lease. The most common forms of commercial leases in New Zealand are:

* A "Boma" lease: which is a "landlord friendly" pre-printed form of lease used for large commercial centres.

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* A modified Boma lease: many property owners/companies (in particular owners of large retail centres) have adopted their own modified form of the Boma lease; and;

* An Auckland District Law Society (ADLS) lease: a more "tenant friendly" pre-printed form of lease, historically used for smaller commercial premises or those not part of a retail or commercial centre.

A lease gives the tenant a legal right of exclusive possession of the premises.

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However, assuming that you are the sole owner of the industrial complex, and it is not subject to the controls of a body corporate, you have the absolute authority to regulate the tenants' use of the premises through the provisions of the lease.

You have not said that your father in any way formally permitted the tenant to place the container where he has, rather that your father simply allowed him to do so.

Assuming that the situation was not formalised but rather tolerated, and that your tenant has not relied to his/her detriment on placing the container where it is, then you should be entitled to ask the tenant to move the container immediately.

Complications can arise where a parking area is enjoyed by several tenants, each of whom has no specified areas within it, only general use rights.

Leases will normally describe and provide a plan of areas such as gardens, stairs, toilets and access ways being "common areas".

Tenants will be permitted to use these areas without being granted exclusive use. These are ancillary rights to the main grant of lease of the use of the premises.

In other words, these areas are not described as "the premises" (the subject of a lease) and will not be included in any other lease. No tenant will be entitled to claim or insist on exclusive use of these common areas.

If a lease specifies that a particular tenant has an identified numbered carpark then that tenant will be entitled to use that carpark for the purposes of carparking only. Your lease should contain carparking provisions detailing how that carpark is to be used and not used.

In your case, it is possible that by allowing the tenant to place the container over the access way and carpark, you may have breached the terms of your other tenants' leases.

This would depend on what each lease says about the use of the carpark and access way, and whether these are for tenants' exclusive use or for use in common with other tenants, and whether the container placed there interferes with the use and enjoyment of the other tenants.

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A consideration is any safety or fire hazard risk that may arise from a container blocking an access way.

If you are able under the relevant tenant's lease (and are permitted under other tenants' leases) to formalise the arrangement by varying a tenant's lease to grant exclusive use of part of the access way and the carpark as storage, then you are entitled to charge a fee for this.

Q. I have also not reviewed the rents in nearly two years and they are below market value. What process do I need to go through to increase the rents?

A. The frequency and mechanism of the rent reviews will be contained in the lease.

Usually, a landlord is required to provide written notice specifying what the landlord considers the current market rent to be. The tenant will then have a period of time in which it can elect to dispute the proposed new rental.

If no dispute notice is given by the tenant, the tenant is deemed to have accepted the proposed rental.

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If the tenant and the landlord cannot agree on the current market rental, then the review provisions in the lease will provide a mechanism for arbitration to determine the rental.

* Send us a commercial property question

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