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Property briefs

Victims of domestic violence can terminate tenancies

Changes to the Residential Tenancies Act 1986 (RTA) came into force on 11 August 2021 allowing a tenant to terminate their fixed term or periodic tenancy if they are the victim of a domestic violence incident.

Domestic violence under the RTA has the same definition contained in section 3 of the Domestic Violence Act 1995 and includes physical, sexual and psychological abuse.

If your tenant is a victim of domestic violence, they may exit from their tenancy agreement by giving you (the landlord) two days’ notice. Your tenant needs to provide you with evidence of the domestic violence. It is important that when you receive notice from a tenant in this situation that you treat this with confidentiality and sensitivity, and meet your obligations under the Privacy Act 2020.

If your tenant is part of a group tenancy situation, they must notify the other tenants within two days after the date the tenancy expires. The remaining tenants are entitled to a two-week rent reduction that is calculated using the formula in section 56B of the RTA.

We can help you navigate the process if your tenant gives you notice to terminate the tenancy after a domestic violence incident.

 

Body corporate rules beefed up

The Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Act 2022 became law on 9 May 2022.

The purpose of the amendments is to:

  1. Improve the information which sellers must provide to buyers of unit title properties. To help sellers in providing information, bodies corporate now have a duty to retain records and make information available to owners for the purpose of disclosure
  2. Strengthen the governance arrangements for bodies corporate, which include expressly permitting committee members to attend a body corporate meeting by audio or audiovisual link, specifying that a quorum is met if owners holding 25% or more of the principal units are present (provided that, where there are two or more owners there is a minimum of two owners present for each meeting) and allowing committee members to vote electronically
  3. Increase the professionalism and standards of body corporate managers by introducing a mandatory code of conduct, and
  4. Ensure long-term maintenance planning and funding is adequate, and provide the ability to establish separate utility interests for different expenses. For example, if there are two units in a single storey development and one unit has twice the ground coverage of the other unit, then a separate utility interest could be established so the bigger unit pays for two thirds of the roofing costs.

The changes will come into effect on 9 May 2024 unless an Order in Council is issued to bring some of the changes in earlier.

 

Buying a property with unconsented works

Building work must meet the standards set out in the Building Act 2004 and the building code. Under the current system, there is a two-step process to have your proposed building work consented and signed off:

  1. You must apply to your local council for building consent, and
  2. The consenting council must inspect the work in order to issue a code of compliance certificate (CCC) confirming that the work has been completed in compliance with the building code.

If you fail to obtain the proper consent and the CCC then your building work is unconsented which leads to significant issues when you come to sell your property. Some banks will not lend to buyers of properties that have unconsented work.

What is most important is to check with your insurer to confirm you can get insurance cover before you sign the agreement. A condition of most, if not all, mortgages is that you keep the property fully insured. If your home has unconsented works, some insurance policies will not cover the unconsented area and some will not cover any damage where, for example, a fire originates in the unconsented area, even if the fire spreads to a consented area. In extreme cases, unconsented works could void your cover entirely.

For some situations, there is a process available to obtain a certificate of acceptance which is the council signing off on your unconsented building work. The process to obtain such a certificate changes from council to council. It may also not be available if too much time has elapsed.

It is important to do your due diligence, so you know what you are buying before you sign the agreement.

If you need any guidance on this, please talk with us.

 

DISCLAIMER: All the information published in Property eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Property eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650


Address these before the lease is signed

In December 2020, a commercial landlord and their tenant found themselves in the High Court arguing about who was responsible for replacing fixtures and fittings because their lease was silent on the issue.[1] These types of disputes around fixtures and fittings in commercial leases are quite common.

For both landlords and tenants negotiating a commercial lease, it is always best to turn your mind to your intentions for any fixtures and fittings attached to the premises; this will help enormously in avoiding costly disputes later on.

Issues to think about

Which items are the landlords fixtures and fittings? Will a tenants fixtures and fittings be added to the premises?

A lease may allow the tenant to make various alterations to the premises to ensure the fit-out meets its business needs. Whether certain fixtures or fittings belong to the landlord or the tenant often affects the rights and responsibilities around those items. It is critical that a clear schedule of landlord’s fixtures and fittings (and the condition of those items) is included in the lease.

Who is responsible for maintaining and repairing the fixtures and fittings?

Under some leases, the landlord’s fixtures and fittings are defined as being part of the premises. This means that the tenant’s obligations around maintenance and repair of the premises include the maintenance and repair of fixtures and fittings. However, this is not always the case and you should make sure that the lease otherwise addresses who holds these obligations.

Who is responsible for replacing broken or worn out fixtures and fittings?

In the Ventura case, the lease was silent about who was responsible for replacing fixtures and fittings during the lease. The High Court determined that, on the wording of the lease, Ventura could decide whether to replace any fixtures and fittings if required for its business and either remove or allow its landlord to purchase these items at the end of its lease.

If it is intended that either the tenant or landlord must replace any fixtures and fittings where necessary, this should be clearly expressed in the lease.

What happens with the tenants fixtures at the end of the lease?

Ordinarily, fixtures are considered to be part of the building, and ownership will pass to the landlord at the end of the lease (subject to any requirements that the tenant reinstate the premises to their original condition).

However, if a lease does not specify otherwise, the default rules in section 266 of the Property Law Act 2007 allow a tenant to remove their trade, ornamental or agricultural fixtures at the end of the lease. These fixtures can be removed before, or a reasonable time after, the end of the lease as long as there is minimal removal damage and the tenant repairs (or compensates the landlord for) that damage.

Commercial landlords should make sure their leases provide specific direction on a tenant’s fixtures if, for example:

  1. The removal of the fixtures and repair of any damage must occur before the end of the lease or within a set timeframe following the end of the lease to avoid, for example, the landlord being unable to re-let the premises while the reinstatement is still ongoing, or
  2. The tenant is required to leave certain fixtures in place and transfer ownership to the landlord at the end of the lease.

Lease assignment

When a tenant assigns the lease, a new tenant may want to change which of the previous tenant’s fixtures they will need to remove at the end of the lease. If this is not done, you may be able to require the new tenant to meet the cost of removing all tenants’ fixtures and fittings – even those installed by the previous tenant.  Before agreeing to reduce the new tenant’s responsibilities, you will need to consider carefully how you want the premises to be left at the end of the lease and who should bear the cost of removing any unwanted fixtures and fittings.

Replacing an expired lease

When replacing an expired lease, both landlords and tenants should ensure that the records of the tenant’s fixtures are up-to-date and included in the new lease. Otherwise, there could be a dispute about whether those fixtures became the landlord’s property at the end of the expired lease.

Take care

The points in this article are just some of the matters to consider around fixtures and fittings in a commercial lease. If you are entering into a commercial lease, please do get in touch, we can advise you in more detail and tailor your lease’s terms to match your intentions for the fixtures and fittings in the property.

[1] Ventura Ltd v Robinson [2021] NZHC 932.


Over the fence

National Environmental Standards for Freshwater Regulations 2020: impacts on winter grazing

The National Environmental Standards for Freshwater Regulations 2020 came into force on 3 September 2020. The standards are designed to protect existing inland and coastal wetlands, improve poor practice intensive winter grazing of forage crops, restrict further agricultural intensification and limit the discharge of synthetic nitrogen fertiliser to land and require reporting of fertiliser use. Continue reading


Postscript

Check your passport is current

With a travel bubble opening with Australia, do check that your passport is still valid before making a reservation.

The Department of Internal Affairs says around 300,000 people currently hold expired passports.

As well as being the best regarded form of identity for AML and other requirements, it would be a pity to have your travel delayed if, at the last minute, you discover your passport has expired. To apply for a new passport go here.

Leave and pay entitlements during Covid response and recovery

Over the past 14 months or so, employers and employees have had to work together during national and regional lockdowns, working from home as a requirement and/or choice and many other employment-related situations. Employment law obligations do not cease during these periods and employers must ensure they are acting in good faith towards their employees, while also trying to navigate these complex and rapidly changing situations.

Covid has thrown up some uncertainties for employers when calculating their employees’ entitlements when they are unable to work from home, self-isolating, unable to travel (where necessary) and so on. The wage subsidy regime was introduced in 2020 to cover a portion of employees’ wages during the first nationwide lockdown and has been reintroduced periodically as needed. In addition, the Covid-19 Leave Support Scheme provides support for employees who cannot work from home or need to self-isolate. To find out more about the Scheme go here.

This is a complex area of employment law and it’s important to get it right. For more information, go here.

If you would like more guidance on ensuring you are paying everyone correctly, please get in touch, we are happy to help.

A reminder about major changes to tenancy laws

This year heralds some significant changes to tenancy laws:

Changes from 11 February 2021: Several changes to the Residential Tenancies Act 1986 took effect on this date. These include an increase to either the 63 or 90 days’ notice period for termination of a periodic tenancy and an increase in the level of awards the Tenancy Tribunal can make from $50,000 to $100,000.

There are further changes that take effect from 1 July and 21 August 2021; and from 1 July 2023 and 1 July 2024.

To read more about this go here.


Property briefs

In response to the Covid pandemic, changes continue to be made around tenancies – both residential and commercial – as well as mortgages and lending.

Healthy homes standards compliance

To accommodate delays arising from the Covid restrictions, the deadline for landlords to provide healthy homes standards compliance statements to their new tenants has been extended by five months.

The healthy homes standards have been introduced to ensure that all rental properties have, for example, adequate heating, insulation and ventilation. As part of the first stages of these standards, you must provide any new tenants or tenants renewing their existing agreement with information on whether your property meets the healthy homes standards. This is called a healthy homes standards compliance statement. Continue reading


Some temporary changes

Due to the Covid lockdown and the ensuing impact on the country’s economy, the government has made temporary changes to the Residential Tenancies Act 1986. These changes restrict a landlord’s ability to increase the rent or to end residential tenancies. If you are a landlord, you should read on to ensure you are not inadvertently breaching this temporary law change.

Over the period 26 March 2020 until 25 September 2020, landlords cannot increase the rent for a residential tenancy. This includes any rent increases about which you have already notified to your tenant, but had not taken effect before 26 March 2020. If you try to enforce a rent increase before 25 September 2020 you will be committing an unlawful act.

Continue reading


Property Briefs

There have been a number of developments around property investment by overseas investors and also on residential tenancies.

If you are an overseas investor or a landlord, you should ensure you are up-to-date with the latest changes and/or proposals.

Update on Overseas Investment Act 2005

An overseas investor attempting to circumvent the requirements of the Overseas Investment Act 2005 has received the first criminal conviction under that legislation. In February 2020, Dr Won Joo Hur was fined $100,000 for falsely stating to the Overseas Investment Office (OIO) that a property was not purchased on his behalf and providing a false loan document to support his version of events.

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Property briefs

Frequent buying and selling of property tax rules under review

If you frequently buy and sell property, you may want to keep a close eye on Inland Revenue’s review of some property tax rules that was announced in September 2019. One area being targeted is the use of the ‘main home exemption’.

Under current rules, you may be exempt from paying tax on a property sale if the property is your main home. You cannot rely, however, on the ‘main home exemption’ if:

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Residential tenancies

Affecting both landlords and tenants

The Residential Tenancies Amendment Act 2019 came into force on 27 August 2019. This legislation affects both landlords and tenants in a number of ways including limiting a tenant’s liability for careless damage in rental properties, and how methamphetamine (meth) contamination of rental properties is to be tested and managed. Landlords are also now required to provide a statement in the tenancy agreement about the property’s insurance.

Damage to rental properties

The legislation is designed to encourage tenants (and their guests) to look after the property they rent, and for landlords not to be out-of-pocket for careless or intentional damage by their tenants.

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Leasing commercial premises

Before you sign the lease

Commercial leases come in varying shapes and sizes. Whether you operate a transport business and need a place to park your trucks, manufacture and sell goods from a warehouse or conduct your trade from a boutique store in the heart of the CBD, your lease agreement will be at the heart of your business.

Before you sign a lease, there are a number of core issues to consider. It is important to do your homework and talk with us before you commit to anything.

Continue reading