No Access in Emergency 27.5 If there is an emergency and the Tenant is unable to gain access to the premises to fully

Expert's Assistant chat
Customer: No Access in Emergency 27.5 If there is an emergency and the Tenant is unable to gain access to the premises to fully conduct the Tennant's business from the premises because of reasons of safety of the public or property or the need to prevent or overcome any hazard, harm or loss that may be associated with the emergency including:(a) a prohibited or restricted access cordon applying to the premises; or(b) prohibited on the use of the premises pending the completion of structural engineering or other reports and appropriate certification required by any competent authority that the premises are fit for use; or(c) restriction on occupation of the premises by an competent authority,then a fair proportion of the rent and outgoings shall cease to be payable for the period commencing on the date when the Tenant became unable to gain access to the premises to fully conduct the Tenants Buisness from the premises until the inability ceases.27.6 This subclause 27.6 applies where subclause 27.5 applies and the premises or building of which the premises form part are not totally or partially destroyed or damaged resulting in the lease being cancelled as provided for in subclause 26.1 or 27.4 . Either party may terminate this lease by giving 10 working days written notice to the other if:(a) the Tenant is unable to gain access to the premises for the period specified in the First Schedule; or(b) the party that terminates this lease can at any time prior to the termination establish with reasonable certainty that the Tenant is unable to gain access to the premises for that period.Any termination shall be without prejudice to the rights of either party against the other.Definitions and Interpretation(d) emergency for the purpose of subclause 27.5 means a situation that;(1) is a result of any event, whether natural or otherwise, including  an explosion,  earthquake, eruption, tsunami, land movement, flood, storm, tornado, cyclone, serious fire, leakage or spillage of any dangerous gas or substance, infestation, plague, epidemic, failure of or disruption to an emergency service; and(2) causes or may cause loss of life or serious injury, illness or in anyway seriously endangers the safety of the public or property; and(3) the event is not caused by any act or omission of the Landlord or Tenant.What are my options with this in relation to the current Covid-19 situation?
Answered by Chris The Lawyer in 6 hours 2 years ago
imglogo
Chris The Lawyer
10+ years of experience
logo

41380 Satisfied customers

Expert in: Family Law, Legal, Estate Law, Real Estate Law, Criminal Law, Employment Law, Business Law, Consumer Protection Law, Bankruptcy Law, Traffic Law, Personal Injury Law.

logoBack
logologo
Chris The Lawyer
logo
logo
41380 Satisfied customers
logo
10+ years of experience
imglogo
Chris The Lawyer
10+ years of experience
logo

41380 Satisfied customers

Jessica

Jessica

Consultant

31,131 Satisfied customers

Pearl avatar
Lawyer's, Assistant
116 Lawyers are online right now.
Customer
No Access/Insurance page
img

Chris The Lawyer, Expert

Hi
I am a New Zealand lawyer based in Wellington and will help you with your question today. Please give me a minute to read the question

img

Chris The Lawyer, Expert

COMMERCIAL LEASES AND NO ACCESS DUE TO LOCKDOWNThe standard form 6th edition 2012 (version 5) ADLS lease contains updated (post Christchurch earthquakes) clauses that deal with the situation where a tenant cannot access the leased premises “to fully conduct” the tenants business from those premises for reasons associated with an emergency (clauses are found at clauses 27.5 to 27.6 of the Lease) and not the fault of the landlord or tenant.Where there is an Emergency that prevents access to the premises (damage or destruction to the building is not required) then there the clause requires a suspension of a proportion of rent and outgoings because the premises are inaccessible due to that “Emergency” event.Emergency is defined in clause 47.1(d) of the second schedule of the lease and includes natural or unnatural event that is not caused by the landlord or tenant, that causes, or may cause: Loss of life, serious injury, illness; or otherwise endanger the safety of the public or property.Such an event includes:1. an Explosion;2. serious fire;3. earthquake;4. eruption;5. tsunami;6. flood;7. tornado;8. cyclone;or9. epidemicIn an emergency situation, a fair and reasonable proportion of the rent and outgoings shall cease to be payable from the date the tenant was unable to access the premises.As such, with a declared state of emergency because of a pandemic and a lockdown in effect from midnight Wednesday 25th March the suspension of a fair proportion of rent and outgoings would apply from midnight Wednesday, 25th March until the “inability [to access the leased premises “to fully conduct” the tenants business] ceases”.This aspect of the clause is not linked to physical damage to the building.That there must be a cessation of rent and outgoings seems clear the question is: what is a fair proportion? - prima facie you would say 100%. There are no guidelines in the lease. This could be negotiated.Some amounts of Opex (outgoings) such as a proportion of rates and perhaps other outgoings such as for insurance premiums may still be reasonably charged. It could be arguable that - for a warehouse for example where the primary use is storage a proportion of the rent also could be reasonably still charged.Older or non ADLS leases won’t necessarily contain this clause.

img

Chris The Lawyer, Expert

After discussing this with colleagues I think around a 50% rebate is usually fair

Customer
Thanks Chris, as per attached to previous question ask, they Landlords are requesting 80%. My problem is had this last longer that 4 weeks and even prior to that the Buisness is going to be broke. Where do I stand with the lease had the buisness go broke.
img

Chris The Lawyer, Expert

There isn't a set rate but perhaps tell the landlord he must share the pain, and that if he insists on 80% he may end up with no tenant at all. If he tries to take steps to cancel your lease you could stop him, but would possibly need a lawyer to help, which is of course another cost

Customer
If he was happy to end up with no Tenant at all because the Buisness goes broke, how does this effect my lease? The buisness is broke but the DEED of lease for building and plant expires 31/03/2021
img

Chris The Lawyer, Expert

As you will be aware the liability for the rental continues until the end of the term, and if you have personal guarantees then it is also a personal debt. the landlord must make reasonable efforts to find a replacement tenant. But that may be a difficult issue. You certainly can defend at least part of any claim for rental based on clause 27 but that will not solve the problem of the business going broke unfortunately

Ask a lawyer and get your legal questions answered.
See all Legal Questions
img
How it works
logoAsk for help, 24/7
Ask for help, 24/7
Members enjoy round-the-clock access to 12,000+ verified Experts, including doctors, lawyers, tech support, mechanics, vets, home repair pros, more.
logoExpert will respond in minutes
Expert will respond in minutes
After you reach out, we match you with an Expert who specializes in your situation. Talk, text, chat, whichever you prefer.
logoSave time & money
Save time & money
No scheduling hassles, missing time from work, or expensive consults.
A JustAnswer membership can save you significant time and money each month.
img
logo 593 Verified lawyers, 10+ years of experience
DISCLAIMER: Answers from Experts on Askalawyeroncall.com are not substitutes for the advice of an attorney. Askalawyeroncall.com is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response as proposing specific action or addressing your specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances should be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on any information received from an Expert, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains. The responses above are from independent, freelance Experts, who are not employed by Askalawyeroncall.com . The site and services are provided “as is”. To view the verified credentials of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service.
Explore law categories
Powered by JustAnswer