A Wellington-based company leased a warehouse under an Agreement to Lease. The Lease contained a list of landlord’s works to be completed prior to its commencement, as well as details of the fit-out works that the tenant wanted to undertake.  Many of the tenant’s works were dependent on the landlord’s works having been completed before they could be started.

A few months later, the landlord had not completed their works.  The tenant therefore could not complete their own fit-out which was essential for them to be able to run their business.  The rent was to start being paid two months after the parties signed the Lease.  Therefore the tenant was paying rent for a premises they couldn’t use due to the landlord delaying the works it was completing. 

As a tenant, it is essential to take advice when signing an Agreement to Lease to ensure that you are protected in a situation like this.  There are clauses that can be added to your lease to provide some recourse in situations like this, such as penalties for late completion of works, or a “sunset date” which records that if the works aren’t completed by a certain date, the commencement date will be moved to a later date, payment of rent will be delayed, or the tenant will have the right to cancel the lease.