Commercial Property Newsletter - April 2019 Protecting against a building company’s collapse – what you can do to minimise your risk if your builder goes bust. Written by Jeroen Vink - Senior Associate (Property) As an owner (or principal) one of the biggest risks on a building project is the builder/ main contractor ‘going under’ during construction. There have been a number of recent high profile building company collapses and this is not an uncommon reality across the building industry. Whether you are engaging builders for a large commercial project or for your first home there are security protections that you can employ in order to help mitigate some of the risk. This article explores some of the more common mechanisms and practical tips that owners can use to help give them some piece of mind. Retentions. Retentions are sums of money withheld by the owner on each progress payment. These retention monies are normally held for the duration of the project and can be used by the owner to rectify defective or non-completed work. Generally, the amount retained is applied on a scale. For example, the standard building contract, NZS3916 uses a scale that is 10% on the first $200,000 then 5% on the next $800,000 and 1.75% on the balance, up to a total aggregate amount of $200,000. Common maintenance and repair issues under a commercial lease Written by David Fitchett - Partner (Property) Cavell Leitch is often asked by both our landlord and tenant clients to help determine the extent to which a tenant is required to maintain and repair their premises under a commercial lease. In this article we set out a few common scenarios: Scenario 1: The premises’ roof has sprung a leak and needs repair.
The starting point will always be to refer to the lease document. A typical Auckland District Law Society (ADLS) lease will require the Landlord to keep the premises water-tight. The Landlord may be able to recover some of the repair costs from a Tenant, but it is important to note that outgoing item 7 of an ADLS lease only allows a Landlord to recover costs for ‘minor repairs’ to a roof. Repairs which are more than minor, or are caused by a structural defect in the building, will be payable by the Landlord. Exactly what constitutes a ‘minor repair’ as opposed to a ‘more than minor repair’ will depend on the circumstances. David Fitchett - Partner (Property) David specialises in property law, and acts for a broad range of commercial, residential and industrial clients. His particular area of expertise is in the area of commercial leasing where he acts for international, national and local landlords and tenants. David works with his clients and their agents to ensure their lease documents are tailored to their individual circumstances from the outset.
Jeroen Vink - Senior Associate (Property) Jeroen's specialist areas of practice include construction and property development, the sale and purchase of commercial and industrial property, leasing (acting for both landlords and tenants), property financing and residential property. Jeroen also advises on insurance claim resolutions and settlements, construction contracts, Overseas Investment Act consents and other property related issues. Please email rebecca.connaughton@cavell.co.nz to register for our Illuminate Seminar. |