The Auckland District Law Society (ADLS) Lease Has Changed

The Auckland District Law Society released the sixth edition of their standard form commercial Deed of Lease on 5 November 2012. There are significant changes from the previous edition of the ADLS commercial lease form that attempt to address many of the issues that have arisen out of the Christchurch earthquakes.

The most significant changes include:

• Provision for landlords to enter premises in the event of an emergency with no written notice. This clause may be relied on where earthquake strengthening work is required to the building. In these situations, the landlord may require the tenant to vacate the premises to enable the works to be carried out.
• Should a tenant’s business use of its premises be materially disrupted as a result of the landlord entering the premises, the tenant is entitled to a reduction of a ’fair proportion‘ of the rent and outgoings paid under the lease.
• Removal of the improvements rent provisions.
• Provisions for the payment of a ‘fair proportion’ of rent where premises are undamaged, but are inaccessible for the purposes of a tenant’s business – for example, where premises are cordoned off.
• Cancellation of the lease where the premises cannot be accessed for the nine month default period provided for in the lease.
• The introduction of Consumer Price Index (CPI) rent reviews, as an alternative to, or as well as market rent reviews.

The changes adopted in the sixth edition have sought to provide some clarity to leases in relation to significant natural disasters (such as the earthquakes in Christchurch), as well as offering some new rent review options for parties. These will be important factors for landlords and tenants to take into consideration when entering into a commercial lease.