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Looking for commercial property to conduct your business can be an involved process.  Finding appropriate business premises can be difficult and expensive. You also need to worry about the lease itself and whether its conditions protect your interests. There are many clauses and terms in a lease agreement that may need some explaining, especially if you are not familiar with such terms. The Auckland District Law Society (ADLS) Deed of Lease is a common form used for lease agreements, with various clauses that you should be familiar with if you are looking to be a commercial tenant. One such clause is the description of premises, which many lease agreements other than the ADLS also include. This article will explain: 

  • how commercial lease agreements work;
  • the description of premises clause; and
  • how this relates to maintenance and repairs obligations.

What Is In a Commercial Lease Agreement?

A commercial lease agreement sets out the terms of your leasing relationship and how it functions on a day to day basis. You set this out in a written document like a deed of lease or an agreement to lease. It outlines the property’s nature and your right to exclusive use of that property as the tenant. You negotiate the terms of the lease with your landlord to suit your specific needs and interests.

Your lease agreement should include:

  • each of the parties to the agreement;
  • the term (length) of the lease;
  • any rights of renewal and assignment;
  • the business activities you are allowed to use the premises for, known as ‘business use’;
  • property insurance details;
  • the nature of any outgoings (expenses on top of rent) which you have to pay;
  • how the landlord will calculate rent reviews;
  • details of any guarantors; and
  • a description of the premises.

What Does a Description of Premises Cover?

The description of the premises clause in your lease agreement is relatively simple. It outlines the premises’ exact nature, whether this is an entire building or just one floor. It will define the property’s perimeter and describe its structures and contents. This would include:

  • its physical description;
  • any fixtures or fittings on the property;
  • its exact size (in square metres) and measurement specifications;
  • the property boundary. For example, defining the specific rooms in an office space that you are leasing; and
  • any car parks attached to the property you can use, including the annual value of these car parks.

Your lease agreement will likely also include a condition report, which details the premises’ condition on the date the lease started. This will be an itemised list describing each room’s condition and its fittings. Usually, there would be photos of the property as well.

If your lease agreement has a make good clause, you will refer to this report to ascertain the condition the property needs to be in when you leave.

Importance of the Description of Premises

The description of the premises clause is essential because it outlines the area you have exclusive possession of. When your lease starts, you should look through the property and check it against the condition report before you start moving in. Make sure that the report accurately describes the condition of the fittings and fixtures, as well as spot any already existing damage that maybe you did not previously notice. The condition report should be current, and not one that the landlord has used from a previous tenancy.

For example, say a previous tenant left behind an extra oven in your cafe’s kitchen. If the landlord owns that now and includes that in the premise description and condition report as part of the property fittings, you are likely responsible for maintaining that oven.

The description of premises clause and its condition report will be a guide you refer to during and at the end of your lease. If you cause any damage during your lease, it is generally your responsibility to repair or remedy it. However, if it was a defect that was already on the property, then you may not have to. 

Maintenance and Repair Obligations

Both you and the landlord have property maintenance and repair obligations. Your responsibilities correspond to the area that you are renting. This includes:

  • maintaining the premises in the same or better condition as it was before you leased it;
  • repairing any damage that you cause during your lease;
  • replacing any broken fixtures or fittings, like lightbulbs or carpet; and
  • keeping the premises in order as much as possible during your lease. For example, paying someone to clean your office.

If your lease covers only the part of a building, then the landlord has a responsibility to maintain that building’s common areas, like its elevator or lobby.

Your landlord also has a duty to:

  • insure the property;
  • make sure it complies with the relevant building standards; and
  • ensure the buildings of the property are weatherproof.

Key Takeaways

The description of premises clause in your lease agreement covers the boundaries of the property and describes the nature of its interior. This is important if there are any disputes over damage or similar issues. If you would like more information or help with the terms in your commercial lease, contact LegalVision’s New Zealand property and leasing lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What should I include in my commercial lease agreement?

You would write up your commercial lease agreement in a deed of lease or an agreement to lease. Depending on the kind of document you use, you would identify who both parties are and sum up the nature of the lease relationship. This would include identifying the term (length) of the lease, business use, rent details, and other important terms.

What is a description of premises clause in my deed of lease?

A description of premises clause identifies the exact boundaries of the leased property. It also lists the nature of its interior, including any fixtures or fittings. This describes the property at the beginning of the lease.

Why is a description of premises clause important?

Including a description of premises clause in your lease agreement is essential, because it defines the property’s nature. If there are any disputes over which areas you have exclusive possession of, you can check this clause to find out. At the end of your lease, you would also look to this clause to help with any reinstatement concerns.

What is a premises condition report?

A premises condition report is a common attachment to a commercial lease agreement, such as the ADLS deed of lease. This outlines the conditions of the property at the beginning of the lease. It looks like a description of each room and its condition, with tickboxes to classify the room’s quality or condition. There may also be photos attached.

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