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LAPA Conference Managing the Fundamental Terms of Leases

LAPA Conference Managing the Fundamental Terms of Leases. Michael Wood Mike Dennehy 9 October 2008. Why?. What is the purpose of management: To be effective, efficient and, where appropriate, profitable This will depend upon a number of factors Type of property Commercial Social

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LAPA Conference Managing the Fundamental Terms of Leases

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  1. LAPA ConferenceManaging the Fundamental Terms of Leases Michael WoodMike Dennehy 9 October 2008

  2. Why? What is the purpose of management: • To be effective, efficient and, where appropriate, profitable • This will depend upon a number of factors • Type of property • Commercial • Social • Community • Legal constraints eg LGA 2002, Public Works Act, Reserves Act • Council policies and objectives • Rent policies • reasons for holding particular properties eg for future public works

  3. Purpose of Management Also…..avoid disaster! • Being unable to require removal of tenant’s fit out • Inadequate insurance • Inappropriate change of use depressing rents

  4. What are the key lease terms to be managed? • Critical dates - rent reviews, lease renewals, expiry dates, redecoration • Landlord and Tenant maintenance obligations • Rent and Operating Expenses

  5. Key lease terms continued • Assignments and Sub Leases • Use and changes of use • Lease expiry obligations - make good

  6. How are these managed? • Proper understanding of the lease and the associated legal implications • Well informed and effective lease negotiations

  7. How are these managed? continued • An understanding of the market and best practice • Taking a strategic approach and understanding the wider implications • Effective relationship management

  8. Legal considerations • Knowing how the law affects the operation of the lease • consider the main areas where the law is important – what you need to know in negotiating leases • insurance and liability for damage • landlord’s consent eg to assignment, change of use, signs, alterations • removal of tenant’s fixtures at the end of the lease • PLA provisions in each of the above cases

  9. Legal considerations continued • Developing an in-house lease or series of leases • could be a set of clauses modifying the Auckland District Law Society lease • gives structure to lease negotiations • is more efficient in setting up leases and ensuring consistency and predictability • must be up to date in terms of law or practice • A good database e.g. Vision Software

  10. Benefits of a good database • Critical date diary to mitigate risk • Protect your properties • Preserve asset values • Reporting

  11. Benefits continued • Planning • Promptly identify issues and opportunities • Power to the property team

  12. Case Study - Wellington City Council • Public consultation including submissions • Recreation leases including recording compliance details of recreation leases, one off events and outgoings responsibilities • Property acquisitions – legislation, price, public consultations • Property disposals – agreements, legislation, marketing, offers back, public consultation, responses

  13. Case Study - Wellington City Council continued • Expressions of Interest • Heritage/Cultural • Reserve land

  14. Q & A Contact Details Michael WoodPartnerSimpson GriersonLevel 27, 88 Shortland Street, Private Bag 92518, Auckland, New ZealandDDI +64-9-977 5329  |  Fax +64-9-977 5026  |  Mobile 021 772 974michael.wood@simpsongrierson.com  |  www.simpsongrierson.com Mike Dennehy CEOVision Software Level 1, 201 Maunganui Road, PO Box 5287, Mt Maunganui, New ZealandPH +64-7-575-6474 Ext 714 | Fax +64-7-575 8287  | Mobile 021 969 097mike.dennehy@visionsoftware.com  |  www.visionsoftware.com

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