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Christchurch owners go to court over leases

Hundreds of commercial landlords and their tenants in Christchurch have been forced to reach for their dictionaries since the city’s earthquakes.

Monday, July 9th 2012, 12:00AM

by Susan Edmunds

Peter Smith, of Smith and Partners, said commercial leases were generally straightforward in that they were governed by an act of Parliament and often followed a set form.

But the Christchurch earthquake had highlighted the fact that from time to time events happened that had not be contemplated when the leases were drawn up, and could cause a few problems.

“There’s been argument over the definition of the word ‘untenantable’. There have been court cases arguing about what it means.”

Smith said there had been so many that even his Auckland-based firm had been involved.

He said the courts had decided that because a lease was a permanent arrangement, damage must be permanent, too, if it was to cause the end of a lease.

If the building was not completely written off, the tenant could not get out of the lease and had to come to an arrangement with the landlord until the building was tenantable again.

Smith said he had heard of cases where both sides used damage as a reason to try to break the lease unsuccessfully.

But he said most cases were being resolved, now the law had been tested in court enough times.

He had worked with one tenant who wanted to cancel a lease because of the length of time reconstruction was going to take. He said the landlord in that case was very understanding.

At the time of the first earthquakes, Evan Harris, a director of Colliers International Property Manager, said that the earthquake showed that many commercial leases didn’t consider the problems that tenants and landlords would encounter when there was structural damage.

He said there was often confusion about who had to pay for repairs.

Office spaces were usually leased empty and tenants broke them into smaller offices by installing walls. 

But if an earthquake separated the partitioning walls from the structural columns, "is that the tenant's fault or the landlord's fault? the landlord owns the column and the tenant ows the partitioning," Harris said.

 

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AIA - Back My Build 5.44 - - -
AIA - Go Home Loans 7.99 5.99 5.69 5.69
ANZ 7.89 6.59 6.29 6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.99 5.69 5.69
ASB Bank 7.89 5.99 5.69 5.69
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.40 - - -
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BNZ - Classic - 5.99 5.69 5.69
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BNZ - Mortgage One 7.94 - - -
BNZ - Rapid Repay 7.94 - - -
BNZ - Std 7.94 5.99 5.69 5.69
BNZ - TotalMoney 7.94 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.79 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 7.65 5.99 5.75 5.69
Co-operative Bank - Standard 7.65 6.49 6.25 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 6.40 6.10 -
First Credit Union Standard 8.50 7.00 6.70 -
Heartland Bank - Online 7.49 ▼5.65 ▼5.55 ▼5.55
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.00 6.50 -
ICBC 7.49 5.99 5.65 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.75 6.89 6.59 6.49
Kiwibank - Offset 8.25 - - -
Kiwibank Special 7.75 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.44 ▼6.39 ▼6.09 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.99 6.95 6.29 6.29
SBS Bank Special - ▼6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.44 ▼5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.69 6.79 6.49 6.49
TSB Special 7.89 5.99 5.69 5.69
Unity ▼7.64 5.99 5.69 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 8.50 ▼6.19 ▼5.79 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
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Westpac Special - 6.29 5.79 5.79
Median 7.99 6.17 5.79 5.69

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