Rural Leases
Posted: 1 May 2020
As a result of the COVID-19 Alert Level 4 situation, one of the issues that has arisen in the commercial leasing area is that of tenants being unable to access their leased buildings. These tenants are in non-essential industries and are therefore prohibited from working, other than from home. This affects commercial leases right across the spectrum from hospitality, retail, office to warehousing. Leasing is common in the rural sector, particularly in the pastoral, horticultural and cropping areas. Agriculture, being an essential industry, is not directly affected by this prohibition on accessing leased land.
No access to land can be an issue
It does, however, raise an issue for the rural sector because there are scenarios in which similar problems could arise as a result of an inability to access the land due to an event outside the control of either the lessor or the lessee. Possibilities might be:
- A biosecurity issue, or
- An earthquake or some other event that impacts on the land or access to it.
Looking back to the ‘red zone’
In the commercial leasing area, attempts were made to deal with this issue following the Christchurch earthquakes. Many buildings were undamaged by the earthquakes but lessees couldn’t access them because they were located in the ‘red zone’.
Most commercial leases had fairly comprehensive provisions dealing with what would happen in the event buildings were damaged by an event such as an earthquake but were silent when dealing with buildings that weren’t damaged but the lessee was, by law, prohibited from entry.
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