No access clause implied in commercial leases

On 28 October 2021, the Government amended the Property Law Act to imply a ‘no access in an emergency clause’ into commercial leases which do not already provide for adjusted rent payment terms during an epidemic emergency. The implied clause applies from 18 August 2021, which was the start of the most recent rise in Alert Levels, but will not affect agreements between landlords and tenants to adjust rent obligations made prior to that date.
Author(s): Virginia Bonanni
A close-up of a silver house key inserted into a round, silver door lock, symbolizing the absence of an "access clause" often implied in commercial leases. The key has a key ring attached, holding several smaller metal rings that reflect light against a plain, dark background.

Businesses without ‘no access’ clauses have been liable to pay full rent throughout the COVID-19 pandemic, although many landlords and tenants have negotiated rent reductions even without a ‘no access’ clause. 

The no access clause allows the lease parties to agree on a ‘fair proportion’ of rent and outgoings that should be reduced during an emergency if the tenant cannot access the property to conduct their business fully. 

The assessment of what is a fair proportion of rent is subject to agreement between the landlord and tenant. They are to consider any loss of income experienced by the tenant during the period they are unable to access the premises due to lockdowns or because of reasons of health or safety related to the epidemic. 

The changes also require the parties to take all reasonable steps to respond to a communication from the other party about the operation of the no access clause, with any disputes being referred to arbitration under the Arbitration Act. Non-binding mediation and other dispute resolution alternatives such as expert determination may also be used to resolve the dispute. 

The New Zealand Dispute Resolution Centre is offering a speedy low-cost fixed fee arbitration and mediation service for parties in such disputes where they have been unable to agree an appropriate level of rent reduction. More information on these and our other dispute resolution services are available here. 

Other resources you might like

If you found this article helpful and are interested in learning more, there is a wealth of other resources available on our website. We have a wide array of articles and guides on a variety of topics, each designed to provide you with a deeper understanding of the subject matter. We encourage you to explore these resources and deepen your knowledge.

A man and a woman sit on a couch, focusing on different activities. The man, wearing a white shirt and grey pants, is looking at his phone, while the woman, in a pink blouse and black skirt, appears deep in thought, twisting her hands in her lap.
Mediation

NZ High Court orders former spouses to ADR

Courts worldwide have long seen the benefits of alternative dispute resolution (ADR) such as mediation. However, the courts have either been constrained or unwilling to force parties to participate in the ADR process. The High Court in New Zealand has bucked the trend and ordered parties to mediate in the first case of its kind, in Wright v Pitfield, setting the scene for a potential future expanded use of ADR in disputes. [1]
Learn more
A person in a suit sits at a table with an open book, placing a hand on it, signifying an oath. A wooden judge's gavel is prominently placed in the foreground on the table. The background is blurred.
Arbitration

Enforcement and recognition of foreign awards made in international arbitrations: as easy as one, two, three…

A Court’s hands can be tied if a party does not ask for its assistance. In this case, the losing parties in an international arbitration had a foreign award enforced against them because they failed to ask the local Court to consider the law on when enforcement could be refused. Without that request, the Court’s hands were tied and obtaining the orders was a straightforward process.
Learn more
A large conference room with a long table surrounded by tan swivel chairs. The room, often used for commercial rent lease dispute mediations, has a high ceiling with recessed lighting and a projector. Floor-to-ceiling windows provide a view of an outdoor landscape. Laptops and office supplies are on the table.
Arbitration, Mediation

Rent relief in the COVID-19 lockdown

For those who have commercial leases, there are questions around whether there is a right for tenants to ask for rent relief and if so, what that relief should look like.

A commonly used form of commercial lease is the Auckland District Law Society lease, which has been in use since 2010. That lease (in clause 27.5) makes provision for rent reduction, where the tenant is unable to gain access to the leased premises because of an emergency situation, such as the COVID-19 lockdown. In such cases, a fair proportion of the rent and outgoings cease to be payable.
Learn more

Get in touch

Contact our team today to see how we can help

Contact us

This field is for validation purposes and should be left unchanged.