The good relationship of landlords and tenants can be maintained by each party complying with their lease obligations. This includes the obligation of reinstatement and wants of repair at the end of a lease term. However, if these lease obligations are not performed and the parties are still on good speaking terms when a lease comes to an end, the settlement for non-performance of reinstatement and wants of repair are usually dealt with in an informal discussion, using building quotations as the basis of costs.However, the deal is often made with little understanding of, or reference to, the lease obligations, condition of the premises at lease commencement or wear and tear of the premises during occupation. So while an informal agreement may work for smaller claims, problems can arise in larger claims because the obligations of the parties have not been fully understood. This can lead to disputes, a damaged relationship and expensive legal costs.
The market in New Zealand is changing. International investors (particularly from Australia), and property professionals and fund managers returning from Europe tend to have experienced, and seen the benefit of a structured make-good claim. Whereas negotiations may once have been dealt with by a company’s financial directors, professional advice is now being sought on reinstatement liability and the attendant negotiation process.
This structured, transparent approach ensures that the relationship between the parties does not suffer – an important consideration in the New Zealand property market.
If you would like to know what reinstatement and wants of repair liability your company has, particularly useful for budgeting purposes, or if you intend or have been served with a schedule and require professional advice, then please feel free to contact us for specialist advice.
