An agreement to lease is an agreement between a landlord and tenant of commercial property. It gives the parties an opportunity to record their leasing arrangements before they are formalised in a deed of lease.
There are many details to be worked through between parties to a lease. The agreement to lease should set out most of the details between the parties so when it comes to signing the deed of lease there is no confusion or discrepancy.
What should be included?
The agreement to lease needs to clearly identify the parties to the agreement and the premises to be leased.
In addition, it should record the annual rent, any reviews of the annual rent, the term of the lease, any renewals of the lease as well as a commencement date and the details of any guarantors required.
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Grants available to insulate rental properties
Recent changes to the Residential Tenancies Act 1986 require all rental properties to have ceiling and underfloor insulation meeting a set standard, where reasonably practicable, by 1 July 2019.
A limited number of grants (for 50% of the cost) are available through Warm Up New Zealand: Healthy Homes, on a first-come-first-served basis for rental properties occupied by low-income tenants and are not owned by a government agency. The criteria are:
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Know your rights and obligations
Many episodes of Neighbours at War told of disputes regarding shared driveways. Whether you currently own a property or you’re in the market to buy a property with a shared driveway, it pays to know your rights and obligations to ensure you and your neighbour won’t be featuring on the next episode.
Right of way easement
The most common shared driveway is formed by an easement, granting ‘A’ the right of way over ‘B’ (or part of ‘B’). The rights and obligations of each party will be found in the easement certificate or instrument registered on the titles to the respective properties. It’s likely those easement instruments will refer to the Land Transfer Regulations 2002 and Schedule 5 of the Property Law Act 2007, which set out the implied rights and covenants that apply in right of way easements.
Both the Regulations and the Act allow the grantee and the grantor (and their agents, invitees, tenants and so on) the right to pass and re-pass over the easement area on foot, or with vehicles, machinery, plant and stock. The parties must repair any damage that they cause and they must keep it clear of obstructions such as parked vehicles or wheelie bins. If your neighbour parks on the right of way but you can still get past, then they may not be in breach of the implied rights.
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Further implementation of bobby calf regulations
Last year new regulations for young calves were introduced and took effect from 1 August 2016; we covered this in Rural eSpeaking, Winter/Spring 2016.
On 1 February, a new regulation came into force; bobby calves are to be fed at least once in the 24 hours before slaughter (a reduction from 30 hours).
Further regulations are to take effect this year including:
- Proposed 1 August 2017: Suitable shelter will have to be provided for young calves before and during transportation, and at points of sale or slaughter, and
- Proposed 1 August 2017: Loading and unloading facilities will have to be provided and used when young calves are transported for sale and slaughter. The facilities must be designed so that a calf is able to walk on or off the transport.
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Give it some thought when buying or selling
Agreements for the sale and purchase of rural land generally contain a ‘good husbandry’ clause. This clause is often inserted into the agreement as a ‘boiler plate’ or standard clause by real estate agents when preparing contracts. We discuss why it’s better to tailor-make this clause to suit each transaction.
The standard clause is often worded along these lines:
From the date of this Agreement until settlement, the Vendor shall continue to farm the property in a good and husband-like manner and in accordance with approved good farming practice in the district and shall neither overstock nor under-stock the property, nor do anything to impoverish the soil nor remove or damage any improvement or fixtures on the property.
However, both a seller and a buyer should give careful thought to the wording of this clause and its implications; it should be tailored to suit the particulars of any given transaction. This is particularly so for transactions where settlement is some time out from when the agreement was signed. It also needs to relate to properties where specific types of farming are being carried out.
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It’s not unknown for us to receive a shocked look from farmer clients when we advise them that they are subject to the Residential Tenancies Act 1986 regarding the accommodation they are providing to their staff.
These types of accommodation provisions are classed as ‘service tenancies’. They are largely subject to the same rules as any other residential tenancy with a few minor exceptions such as rent in advance and termination notices.
As an employer or farm owner, you must comply with the same standards as any other landlord and you can be subject to a Tenancy Tribunal hearing if you fail to comply.
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The oven doesn’t work – what to do?
Nothing is worse than planning a celebratory dinner in your new home and finding the oven doesn’t work. How can you ensure this doesn’t happen?
The last thing you think about when making an offer for a property is the condition of the chattels (like the oven). These are listed in the agreement and are often breezed over. When the oven doesn’t work when you go to use it, there isn’t much that can be done if you haven’t thought about it when you signed the agreement.
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Every day more Kiwis are learning that they have been living in methamphetamine (P)-contaminated properties. Discovering you have purchased a contaminated property can be financially, mentally and physically devastating for you and your family. This article looks at P-testing and the risks if you suspect the property is P-contaminated and nothing is done.
When purchasing a property there is a lot you should consider. Purchasers are usually advised to include a builder’s report, Land Information Memorandum (LIM), obtaining finance and insurance on the agreement’s standard conditions. Many purchasers overlook the possible need for P-testing when buying a property. Since 2002 the use of P has skyrocketed, and it’s not wise to presume that properties in well-respected areas are safe. P-users come from many different walks of life.
Properties where P has been produced or regularly used are exposed to numerous chemicals which are absorbed by different surfaces and structural features. P-contamination within properties is rarely visible and it can cost huge sums to decontaminate.
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Proposed business tax changes
In April, the government announced a package of proposals to simplify business tax, many of which will benefit small and medium-sized businesses. Some of the key tax proposals include:
- A new pay-as-you-go option for paying provisional tax for small businesses with less than $5 million annual turnover. This will give small businesses an alternative to the current system which requires three annual provisional tax payments. To take advantage of the proposal, businesses will need to use a cloud-based accounting system, such as Xero, linked to the Inland Revenue.
- Changes to the ‘use-of-money interest’ rules that govern the interest paid to taxpayers for overpayment of tax and interest charged for underpayment. The practical effect is that the changes will eliminate or reduce use-of-money interest for most taxpayers.
- Contractors will be able to elect their own withholding tax rate to better reflect their circumstances and reduce the impact of provisional tax.
- Certain penalties will be removed, including the current 1% monthly penalty for new debt. However, immediate penalties and interest charges for late payments will still apply.
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Here we publish the March 2011 issue of Rural eSpeaking; we hope you enjoy reading it. If you would like to talk further about any rural issues, please don’t hesitate to contact us.
In this Autumn edition, you can read articles on:
· Personal Property Securities Act: Grappling with section 53 in a livestock purchase
· Leasing the Farm: Can be a practical solution
· Over the Fence: New minimum wage rates – Sharemilking Arrangements: 2011-2-12 season – Public Holidays: Easter 2011 – GST zero-rating land transactions
The next issue of Rural eSpeaking will be published in July.
