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Owning and leasing out commercial property can be an excellent investment. If you lease out your investment property or properties, you will become a landlord to your commercial tenants. Alongside any obligations outlined in the terms of your lease, there are general obligations that you will take on as a commercial landlord. This article will outline what these obligations are and how you can comply with them.  

Quiet Enjoyment

Your tenant is legally entitled to quiet enjoyment of their leased premises. This entitlement allows your tenant to use their premises to their full benefit and without interruption. This is on the basis that they comply with their tenancy obligations. As their landlord, you are obliged not to interrupt your tenant’s enjoyment of their premises. 

For example, due to this obligation, you cannot:

  • take over the lease from your tenants without following the correct process;
  • damage the leased premises (for example, by failing to maintain or repair the exterior of the property. However, your tenants are responsible for maintaining the interior of the premises); or
  • disconnect your tenant’s utilities.

Health and Safety

In New Zealand, commercial landlords fall under the label of a PCBU or a person conducting a business or undertaking. New Zealand’s health and safety laws require all PCBUs to protect the health and safety of their workers and those affected by their work. As a landlord, this category extends to:

  • your tenants;
  • any contractors or subcontractors your tenant’s hire for their businesses;
  • any apprentices your tenants take on; or
  • volunteers that work for your tenants.

You are obliged to eliminate risks to their health and safety so far as is reasonably practicable. If it is not possible to eliminate the risks to your tenants’ health and safety, you must minimise these risks so far as is reasonably practicable. To ensure that you uphold this obligation, you should:

  • understand the risks associated with your premises;
  • take steps to keep all of your health and safety systems up to date; and 
  • actively work on eliminating or minimising the health and safety risks arising from your premises. 

Building Documents 

You are obliged to obtain any required consents, approvals and certificates to ensure that your premises comply with New Zealand’s building laws. Under this obligation, you will have to supply a building warrant of fitness, or BWoF, to your city or district council annually. This BWoF must state all of the processes you have undertaken in the past 12 months to ensure your leased premises comply with building laws. These processes should include:

  • inspection;
  • maintenance; and
  • regular reporting. 

Your BWoF must include:

  • a copy of each certificate compliance that you received for each of your specified systems. These systems tend to be for emergencies, such as emergency lighting, smoke control or sprinklers;
  • the location of your leased premises; 
  • what the current use of your premises is. This use should also detail the number of occupants in your commercial building;
  • the original date of construction; and 
  • the highest fire risk category for your building’s use. 

Insurance 

Your commercial lease will also likely require you to arrange insurance for your property. Insurance will be able to assist you should the following circumstances occur and damage your investment:

  • a natural disaster, such as an earthquake; 
  • a fire or flood;
  • loss of rental income from your tenants; or 
  • liability risks. 

Assignment and Subletting

You are obliged to act reasonably when your tenants put forward an assignment or sublease. Under this obligation, you cannot:

  • refuse the assignment or sublease on unreasonable grounds; or
  • impose further, unreasonable responsibilities on the new tenant or subtenant. 

This obligation does not prohibit you from inquiring about the new tenant or subtenant or requiring your permission before the assignment or sublease goes ahead. You are also entitled to refuse the assignment or sublease on reasonable grounds.

For example, you may decide to refuse if:

  • the incoming tenant or subtenant cannot demonstrate that they can meet the obligations detailed in the original tenancy agreement; or
  • your tenancy agreement prohibited your tenants from assigning their tenancy agreement or subleasing the premises. 

Key Takeaways

As a commercial landlord, there are certain obligations that you must uphold. These obligations include to:

  • not interfere with your tenant’s right to quiet enjoyment;
  • eliminate, or minimise, risks to your tenant’s health and safety; 
  • ensure that your leased premises comply with New Zealand’s building laws by providing an annual building warrant of fitness; 
  • maintain insurance for your premises; and 
  • act reasonably when your tenants put forward an assignment or sublease. 

If you are unsure what obligations you have as a commercial landlord, contact LegalVision’s property and leasing lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What are commercial landlords responsible for?

Commercial landlords are responsible for protecting their tenant’s right to quiet enjoyment of their property, eliminating risks to their tenant’s health and safety, ensuring that their property complies with building laws by providing an annual building warrant of fitness, maintaining insurance for the leased premises and acting reasonably when their tenants put forward an assignment or sublease.

Who is responsible for repairs in a commercial rental property? 

Tenants tend to be responsible for all interior repairs to the commercial property they lease. However, unless otherwise specified in the lease agreement, the landlord will usually be responsible for the maintenance and repairs of the exterior of the building. 

Who is responsible for commercial building insurance?

Insurance for a commercial building will usually fall to the landlord or owner of the building.

Can a commercial landlord enter without permission? 

A commercial landlord usually cannot enter commercial premises without permission or giving notice to their tenants. Doing so would interfere with the tenant’s right to quiet enjoyment and exclusive possession of their premises.

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