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Chris The Lawyer
Chris The Lawyer, Lawyer
Category: New Zealand Law
Satisfied Customers: 22888
Experience:  38 years qualified as a lawyer; LLB, MMgt and FAMINZ.
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We have a small business in Stoke, and a commercial lease on

Customer Question

Hi there, we have a small business in Stoke, Nelson and a commercial lease on the unit within a mall shopping mall. The current lease has just over two years of three to run and we are looking at decreasing business returns. The business is loosing money every year. I appreciate if the landlord agrees then we can all walk away from it (?) But if they do not wish to do this, what are the options for us to vacate the premises and get released from the lease? Thanks you, Martin
JA: Because laws vary from place to place, can you tell me what state the property is in?
Customer: It is a unit within a Mall and could be a very viable premises for the right business.
JA: Has anything been filed or reported?
Customer: Relating to the state of our business?
JA: Anything else you want the lawyer to know before I connect you?
Customer: I guess just what it may cost us to get released from the lease. PS The rent went up 36% last Nov, will go up 12% for each year for the next two years and we just do not have the income from the business to make it viable. Rent last Oct $5800, then heading towards $9700 in Nov 2017. Big increases.
Submitted: 10 months ago.
Category: New Zealand Law
Customer: replied 10 months ago.
I am a little worried how much this may cost? Is there any way you can give me an idea?
Expert:  Chris The Lawyer replied 10 months ago.

This depends very much on how friendly your landlord will be. Your best approach would be to find another tenant and assign the lease to them. Unfortunately if you cannot assign the lease, and walk out, the landlord is, under the terms of the lease, entitled to claim the rent for the rest of the term. That would be for the next two years. There is no provision under the relevant legislation, which is the Property Law Act to cancel a lease and escape liability for the balance of the rent. You would have been able to object to the rent increases if these were beyond market rates, because the standard commercial lease gives you the option of contesting any increase by a rental arbitration. There are time limits for objecting however. Your best option would be an assignment of the lease, but you should talk to the landlord and say that if they insist on the lease in its present rental, then you will become insolvent and be unable to pay.

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