Following the COVID-19 lockdown in 2020, a number of legislative provisions were enacted or changed based on the anticipated effects of COVID-19 on businesses.
One change was in the context of commercial leases and the extension of the notice period to be given by a landlord to a tenant where a tenant is in default on rent payments.
Pursuant to the standard Auckland District Law Society approved form of Lease, if rent has been in arrears 10 working days after a rent payment date, the process to be followed by the landlord is to serve on the tenant a notice under section 245 of the Property Law Act.
The notice formally advises the tenant:
- The rent is in arrears;
- The amount required to be paid;
- The period by which payment must be made;
- The consequence if payment is not made at the expiry of the period, the landlord may seek to cancel the lease under section 244;
- The tenant’s right to seek under section 253 to apply to the Court for relief against cancellation and they may seek legal advice.
In the standard form of lease the prescribed time a tenant must make payment of the arrears after receiving a Property Law Act notice is 10 working days.
Following the COVID-19 lockdown in 2020, new sections were introduced into the Property Law Act to extend this timeframe to 30 working days if it relates to rent arrears during the COVID-19 period.
This gives the tenant a further four weeks to arrange for payment of the rent.
A Property Law Act notice needs to be validly served as per the requirements in the Act. For example in the case of an individual the notice must be personally served on the tenant and in the case of delivery certain requirements apply. Personal service should always be undertaken by someone independent and a process server can be instructed to arrange for this.
If you have any queries in relation to a lease, please do not hesitate to contact one of our team.
