{"id":203214,"date":"2021-03-05T11:59:45","date_gmt":"2021-03-04T22:59:45","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=203214"},"modified":"2021-03-19T09:40:48","modified_gmt":"2021-03-18T20:40:48","slug":"oral-agreement-lease","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/property-and-leasing\/oral-agreement-lease\/","title":{"rendered":"Is an Oral Agreement to Lease Binding in New Zealand?"},"content":{"rendered":"\n<p><span style=\"font-weight: 400\">Is your business looking to rent a commercial property to operate out of? You may be unsure whether you have to draft and sign a <\/span><a href=\"https:\/\/legalvision.co.nz\/property-and-leasing\/essential-terms-lease-agreement-new-zealand\/\"><span style=\"font-weight: 400\">lease agreement<\/span><\/a><span style=\"font-weight: 400\"> or enter into an oral contract with your landlord. This article will outline:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><span style=\"font-weight: 400\">whether an oral agreement to lease is binding; and<\/span><\/li><li><span style=\"font-weight: 400\">the circumstances in which an oral lease agreement is binding by detailing the doctrines of part performance and short-term leases.<\/span><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Are Oral Agreements to Lease Binding?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Under New Zealand property law, all contracts for the leasing of land are not binding unless<\/span> the:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><span style=\"font-weight: 400\">agreement to lease is in writing, or the terms of the agreement are in writing; and<\/span><\/li><li><span style=\"font-weight: 400\">tenant<\/span> <span style=\"font-weight: 400\">and landlord<\/span> <span style=\"font-weight: 400\">h<\/span>ave signed the lease document<span style=\"font-weight: 400\">.&nbsp;<\/span><\/li><\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">Given this requirement, oral agreements to lease are not binding, and the v<\/span>erbal <span style=\"font-weight: 400\">terms are not enforceable. This requirement ensures that there is clear evidence of the contract and the terms of the agreement between you and your landlord.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">However, there are two exceptions to this rule. You can enforce:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">an oral agreement that you have partially performed. This exception is termed the doctrine of part performance; and<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">short-term leases.<\/span><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">What is the Doctrine of Part Performance?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">You may be able to enforce your oral lease agreement if you have done something that demonstrates that you are performing that contract. In other words, if you can demonstrate that there has been part performance of that rental agreement.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Under the doctrine of part performance, your agreement to lease is enforceable, even though it is not in writing and y<\/span>ou or your landlord have no<span style=\"font-weight: 400\">t signed it. If you wish to enforce an oral agreement to lease, you will have to demonstrate that:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><span style=\"font-weight: 400\">it is a binding contract;<\/span><\/li><li><span style=\"font-weight: 400\">there has been part performance of that agreement; and<\/span><\/li><li><span style=\"font-weight: 400\">it would be unconscionable, or unfair, if the agreement was not enforced.&nbsp;<\/span><\/li><\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">A court will evaluate your argument and decide on whether your agreement should be enforced on the parties involved.<\/span><\/p>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 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To be binding, a contract must have:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">a clear offer;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">an unequivocal acceptance backed by consideration. Consideration is something of value. For your leasing arrangement, the consideration will be your rent and outgoings;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">certainty of terms; and<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">a shared intention between you and your landlord to create a binding legal relationship.<\/span><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Has There Been Part Performance of the Oral Agreement?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">As you have not expressed your tenancy agreement in writing, you will have to point to a different kind of evidence that a contract exists between you and your landlord. This evidence is the part performance of the contract. This part performance has to:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">amount to a step in the performance of the obligations under your lease agreement; and<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">be carried out with the intention that there was a binding lease agreement between you and your landlord.<\/span><\/li><\/ul>\n\n\n\n<div class=\"box box--info box--icon\">\n<p><span style=\"font-weight: 400\">For example, say your business started paying your rent and outgoings and your landlord put in measures to ensure that the health and safety of you and your employees are not at risk. These actions were carried out after you and your landlord entered an oral lease agreement.<\/span><\/p>\n<\/div>\n\n\n\n<p><span style=\"font-weight: 400\">Both you and your landlord took steps towards your tenancy obligations&#8217; performance. These actions were undertaken with the intention that there was a binding lease arrangement. These circumstances would meet the criteria of part performance of an oral agreement.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">If you are able to demonstrate these two requirements and indicate that it would be unfair if the oral agreement was not enforced, your agreement may be deemed as binding on you and your landlord.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Short-Term Leases<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">If you do wish to enter into an oral lease agreement with your landlord, you can do so by a short-term lease. A short-term lease is an unregistered lease that lasts for one year or less. Although you cannot lease those premises for a long period, a short-term lease provides your business with nearly all of the same benefits as a long-term lease. The key difference is that you <\/span><a href=\"https:\/\/legalvision.co.nz\/property-and-leasing\/landlord-sells-building\/\"><span style=\"font-weight: 400\">cannot register a short-term lease<\/span><\/a><span style=\"font-weight: 400\">. As the tenant of a registered lease, your business gains an \u2018indefeasibility of leasehold title\u2019. This title means that the law protects the possession of your leased premises for the duration of the registration period.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Key Takeaways<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">In New Zealand, you usually will not be able to enforce an oral lease agreement. It is best practice to record your lease agreement with your landlord in writing to ensure that you are both clear as to your tenancy obligations. However, if you do wish to enter into a verbal contract, an oral agreement to lease may be binding if you can raise the doctrine of part performance. To raise the doctrine of part performance, you must demonstrate that:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><span style=\"font-weight: 400\">your oral lease agreement is a binding contract;<\/span><\/li><li><span style=\"font-weight: 400\">there has been part performance of your agreement; and<\/span><\/li><li><span style=\"font-weight: 400\">it would be unconscionable if the agreement was not <\/span>enforced.<\/li><\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">Alternatively, you may wish to enter into a short-term lease with your landlord.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">If you are unsure whether your oral agreement to lease is binding, contact <a href=\"https:\/\/legalvision.co.nz\/leasing-lawyers-lp\">LegalVision&#8217;s property and leasing lawyers<\/a> on 0800 005 570 or complete the form on this page.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Frequently Asked Questions<\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1614898116335\"><strong class=\"schema-faq-question\"><strong>Can a lease agreement be oral?<\/strong><\/strong> <p class=\"schema-faq-answer\">\u00a0A lease agreement has to be conveyed in a written document and be signed by the tenant and the landlord to be enforceable. However, an oral lease agreement can be binding under the doctrine of part performance or if the agreement is for a short-term lease.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1614898105837\"><strong class=\"schema-faq-question\"><strong>What is a short-term lease?<\/strong><\/strong> <p class=\"schema-faq-answer\">A short-term lease is an unregistered lease that lasts for one year or less.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1614898082309\"><strong class=\"schema-faq-question\"><strong>What is the doctrine of part performance?<\/strong><\/strong> <p class=\"schema-faq-answer\">The doctrine of part performance makes lease agreements that would otherwise be unenforceable, as it is not conveyed in writing, enforceable. To raise the doctrine of part performance, a tenant or landlord must demonstrate that the oral lease agreement is a binding contract, there has been part performance of the oral agreement and it would be unconscionable if the oral agreement was not enforced.\u00a0<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1614898072091\"><strong class=\"schema-faq-question\"><strong>What does oral agreement mean?<\/strong><\/strong> <p class=\"schema-faq-answer\">An oral agreement is a contract that is made verbally and not expressed in writing.\u00a0<\/p> <\/div> <\/div>\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"ed19fd34f0\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/203214\" \/>            <input value=\"https:\/\/legalvision.co.nz\/property-and-leasing\/oral-agreement-lease\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"Is an Oral Agreement to Lease Binding in New Zealand?\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Is your business looking to rent a commercial property to operate out of? You may be unsure whether you have to draft and sign a lease agreement or enter into an oral contract with your landlord. This article will outline: whether an oral agreement to lease is binding; and the circumstances in which an oral<a href=\"https:\/\/legalvision.co.nz\/property-and-leasing\/oral-agreement-lease\/\">Continue reading <span class=\"sr-only\">&#8220;Is an Oral Agreement to Lease Binding in New Zealand?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13234,"featured_media":201627,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[11],"tags":[25,90,641,642],"class_list":["post-203214","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-property-and-leasing","tag-small-business","tag-lease-agreement","tag-oral-agreement","tag-part-performance"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Is an Oral Agreement to Lease Binding in New Zealand? | LegalVision<\/title>\n<meta name=\"description\" content=\"If you have an oral agreement to lease, you need to understand whether it is binding. 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