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The Residential Tenancies Amendment Bill - A
look at the changes for landlords and tenants
The Residential Tenancies Amendment Bill was introduced to
Parliament on 3 December 2015, and with it came a number of interesting
proposed changes to the Residential Tenancies Act 1986. Two of the main aims
of the Bill are: to improve the safety of residential rental properties by
requiring smoke alarms and insulation in all residential rental properties and
to make the process around abandoned rental properties more efficient.
Smoke alarms and insulation requirements
The proposed Bill would require a landlord to ensure that
their residential rental property has working smoke alarms while making the
tenant responsible for changing the alarm batteries and notifying the landlord
of any faulty alarms.
The proposed Bill would further require underfloor and ceiling insulation. The
requirement in respect of insulation splits residential rental properties into
two categories; income-related rent tenancies and all other tenancies. An
income-related rent tenancy generally refers to a property where the rent is
based on the tenant's income under the Housing Restructuring and Tenancy
Matters Act 1992, but excludes boarding houses. For these income-related rent
tenancies, insulation is required from 1 July 2016, while all other rental
properties require insulation from 1 July 2019.
Under the proposed amendments a landlord is also required to provide
information about the insulation of the premises in the tenancy agreement for
the property. This will include whether there is insulation and if so, the
details of that insulation. The Bill proposes that a landlord commits an
unlawful act if this information is omitted from the tenancy agreement or if
the landlord knows the information is false or misleading.
Overall, the aim of these two requirements is to ensure the health and safety
of the occupiers of a residential rental property without imposing excessive
costs on a landlord.
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Inside this edition
The Residential Tenancies Amendment Bill - A look at the changes for
landlords and tenants
Gift vouchers - What happens if the company goes into receivership?
The Health and Safety at Work Act 2015 - In force from 4 April 2016
How well do you know your lease?
Maori Land - How Succession of Maori Land works
Snippets
Updated agreement for sale and purchase of real estate
Buying a vehicle - is there money owing?
Print version
The process around abandoned rental properties
A rental property is an "abandoned rental property" where
the tenant is in arrears and has left the property with no obvious intention
of returning to it.
The current process under the Residential Tenancies Act 1986 for abandoned
rental property cases can take up to six weeks. The Bill proposes a process
which will take ten working days after an application is filed with the
Tenancy Tribunal. Reducing the time to confirm abandonment of a tenancy will
enable a landlord to re-tenant their property, which reduces the loss of
rental income.
The Bill also proposes giving a landlord the right to enter the rental
premises where the rent is at least 14 days in arrears and where the landlord
has reasonable cause to believe that the tenant has abandoned the property.
Furthermore, the Bill proposes that a landlord may enter the premises to
confirm abandonment if notice has been given to the tenant no less than 24
hours prior to entry.
The Social Services Committee report on the Bill is due on 8 June 2016 which
will take into account public submissions about the proposed changes.
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It is an unfortunate reality of
business that Companies fail. When this happens, it can affect a wide range of
different parties and their ability to recover money they are owed.
Any Company can be placed into receivership by one of its secured creditors if
the Company has defaulted on its obligations to that secured creditor. This
process involves a secured creditor appointing someone to act as a receiver.
Often the secured creditor will be a bank which holds security over company
assets, such as a mortgage or General Security Agreement.
The receiver's powers extend to the secured property. This means if there is a
mortgage registered in favour of a bank (the bank being the secured party)
over Company land, that land is the secured property which the receiver has
power to deal with. The receiver acts for the benefit of the secured party
which appointed the receiver, and exercises its powers in the secured party's
best interests.
Once the receivership process has started, the operation of the Company is
significantly altered, and a number of parties can be affected. While a
receiver only deals with Company property over which the secured party holds
security, in many cases it may be that the security extends to a large portion
of, or even all of the Company's assets.
One potentially affected group are those people who hold gift vouchers. A gift
voucher is essentially an unsecured loan, and the holder of a gift voucher is
an unsecured creditor of the Company. While the receiver must exercise its
powers with reasonable regard to the interests of unsecured creditors (among
other parties), its first priority is to the secured creditor.
If the receiver thinks that paying back, or entering into some sort of
arrangement with unsecured creditors will jeopardise the secured creditor's
ability to be paid back, then the unsecured creditors may not be reimbursed. |
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The recent appointment of receivers of Dick Smith Holdings is a case in point.
In this instance receivers were reportedly appointed by banks NAB and HSBC.
The Company's receivers announced that outstanding gift vouchers will not be
honoured and deposits will not be refunded, as those who hold gift vouchers
and who have paid deposits for items are unsecured creditors for the purposes
of the receivership.
As well as the appointment of receivers, the Company has also been placed into
voluntary administration, which is a separate process aimed at deciding the
future of the Company. Some companies "trade through" this difficult time and
continue in one form or another after the voluntary administration period - a
good example is Whitcoulls, which entered voluntary administration and put
gift vouchers on hold in 2011. After administration was completed and the
Company in an acceptable financial position, the company was able to honour
outstanding gift vouchers.
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In New Zealand, more than one in ten
workers claim for a workplace injury each year. To address this, the new
Health and Safety at Work Act 2015 ("the Act") aims to make New Zealand's work
places safer, part of wide Health and Safety reforms ultimately hoping to
reduce the workplace injury and death toll by 25 per cent by 2020.
What does it mean for workers?
The term "worker" is defined widely and includes, but is not limited to;
employees, contractors and sub-contractors and their employees, labour hire
company employees who have been assigned, students and volunteers.
Two key features affect workers:
1. Provisions in the Act protect workers against discrimination and negative
actions if they feel the need to raise a health and safety concern.
2. The Act supports more effective engagement and participation with workers.
This begins with consultations surrounding policies, and extends to practical,
companywide obligations for every worker to abide by regulations and take
reasonable care while in the work place.
What does it mean for business owners?
The Act introduces the term "person conducting a business or undertaking" ("PCBU").
This is another wide term which is intended to apply to a broad range of
business arrangements.
Some key obligations of the PCBU are;
1. To take "reasonably practicable" steps to ensure the health and safety of
workers. These steps include ensuring that risks are minimised throughout the
business; including the work place itself, its fixtures, materials, workers
and tasks.
2. To support and encourage worker participation in all aspects of the health
and safety policies and their enforcement and - if requested by employees -
appoint and train safety representatives. (The obligations surrounding
representatives vary based on the size and nature of the business).
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There will be a growing focus on enforcement,
along with increased penalties for non-compliance. Any insurance that a
company may hold against fines will also have no effect. No businesses,
regardless of the size or level of risk are exempt from the obligations in the
Act.
What does it mean for Officers of PCBU's?
An "Officer" includes, but is not limited to; directors of a company, partners
of a partnership, and any person who is in a position to exercise significant
influence over the management of the business.
Officers will now be personally liable for failing to exercise due diligence
in ensuring that the business is complying with health and safety regulations
even if they were not directly involved in making the decision which
contravenes the Act.
Interestingly, Peter Jackson recently resigned as
Director of Weta Workshop, apparently due to the level of director involvement
that this new Act will encourage. The increased level of personal liability is
daunting for those directors who do not, or cannot take a hands-on approach.
When do the changes come into force?
This Act takes effect on the 4th of April 2016. Work Safe New Zealand will
provide information on the new legislation to businesses in an attempt to make
the transition as seamless as possible. You may choose to consult a lawyer for
more specific advice if you think any of these changes may affect you or your
business.
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The majority of
lease arrangements are entered into using the Deed of Lease provided by the
Auckland District Law Society. Whether you are a business owner and tenant, or
a landlord, it is important that you understand your rights and obligations.
How well do you know your lease?
Tenants right to
quiet enjoyment
As a tenant, you will typically hold a right to quiet use and enjoyment of the
property. Contrary to the wording, this right does not mean you can pursue the
landlord for noisy neighbours, rather, it means that the landlord will not
interfere with your possession and use of the property. If the landlord were
to breach this term, this could give rise to a claim for damages or you could
apply for an injunction to stop the interference.
Tenants'
maintenance obligations
Tenants are often responsible for the maintenance and care of the property.
Some of the responsibilities that you may not be aware of include:
* Replace and repair glass breakages;
* Re-paint and re-decorate the premises when reasonably required (some
landlords will often require this near the end of the lease);
* Replace all worn or damaged floor coverings (carpet) with ones of equal or
better quality;
* Maintain any garden and lawn areas to a tidy and cared for condition; and
* Make minor repairs to the roof where necessary.
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Liability on assignment of your lease
There are a number of different reasons that tenants assign their leases, for
example on sale of a business. An important part of selling your business is
ensuring that it is attractive as possible to a potential purchaser. This
means making sure that a new tenant can continue to stay in the business
premises long term, either by way of a long lease or by providing several
rights of renewal. What many people do not realise however, is that the
original tenant’s liability does not necessarily end when they assign the
lease (and become an "assignor") to a new tenant.
If you enter into a lease you will typically still be liable for the full
current term of that lease regardless of whether you assign to a new tenant.
If the new tenant breaches any of the conditions of the lease, you could still
be liable for that breach. For example: if the new tenant fails to pay rent,
the landlord can often pursue you for the loss, as even after assignment of
the lease you can still retain your original contractual obligation to the
landlord.
When liability ends
Your liability as assignor will typically end at the expiry of the current
lease term in place at the time of assignment. If the purchaser exercises a
right to renew after that term has expired, this would effectively be a new
lease and you will not be liable for a breach by the new tenant during the new
term.
You can limit your risk when assigning your lease by asking the landlord to
agree to limit your liability (although they do not have to agree). You could
also require the new tenant to provide you with an indemnity; however this
does not prevent the landlord recovering from you for any breach of the lease
in the first instance.
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The Maori Land Court ("MLC") is the New Zealand
court that hears all matters relating to Maori Land. It is governed by Te Ture
Whenua Maori Act 1993 ("The Act"). The Act's purpose is to assist Maori to
promote the retention, use, development and control of Maori land.
Maori land is not general land. Maori land is mainly comprised of Maori
freehold land which is land where Maori customary interests have been
converted to freehold title by the MLC. The succession, gifting and transfer
of Maori Land are conducted through the MLC.
Maori land can be owned either by one or several owners, either in shares or
interests. When a landowner dies, the ownership of their interests remains
with them until their interests have been succeeded by application to the MLC.
An application for succession is normally filed by the descendants or
representatives of the deceased landowner or by the surviving landowners or
their representatives i.e. Lawyers for the Estate, or the Deceased's family.
Succession can be straight forward at times. If the deceased landowner left a
will, any successor named in the Will must fall within the definition of
"preferred classes of alienees" as per the Act. This group includes; the
children and grandchildren of the deceased landowner, blood relatives to the
deceased landowner, other beneficial owners that are members of the hapu
(sub-tribe) associated with land and descendants of any former owner of the
land who is or was a member of the hapu associated with the land. If the
deceased landowner did not leave a will (died intestate), the successors are
determined in the following order; a deceased surviving spouse or civil union
partner receives a life interest which will pass to the deceased's children
once the spouse or partner dies or remarries or enters into another
relationship; if there was no surviving spouse or partner, the deceased's
children; if no children, the deceased's siblings and if no siblings, it will
be necessary to find out where the deceased' interests came from and from that
whakapapa (genealogy) work out the entitlement.
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When an application for succession is being
prepared, evidence consisting of a death certificate, a grant of probate or
letters of administration, a copy of original will, must be filed with the
application. Once the application has been correctly filed, the Maori land
court will assign a case manager who will check the Court records of the land
or people involved and prepare a summary of evidence which will be referred to
a Judge who may direct further enquiries to be made. Normally a formal hearing
will then be allocated and the applicant (person who filed the application)
and other interested parties will need to appear at their hearing or their
representative. At the hearing, the Judge will ask those present questions
pertaining to the application and the deceased landowner's interests and
determine whether a Succession Order is made and if so, on what terms.
After the hearing, a record of the hearing will be
typed up and signed by the Judge and sent to the applicant and other
interested parties. If a Succession Order is made, the Order will be drawn up
and sealed by the Court and then sent to all parties after a two month period,
unless otherwise directed by the Judge. The two month period is provided to
enable any appeals to be made.
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Updated agreement for sale and purchase of real
estate
Recent changes to the widely
used Agreement for Sale and Purchase of Real Estate prepared by the Auckland
District Law Society and the Real Estate Institute of New Zealand include:
* When selling an apartment or other Unit Title property, the vendor warrants
(promises) that the information provided in the pre-contract disclosure
statement is correct.
* The vendor also warrants that all plant, equipment, systems or devices which
provide any services or amenities to the property (such as security, heating,
cooling, or air conditioning) will be delivered to the purchaser in reasonable
working order.
* A breach of warranty can already give rise to compensation. The agreement
now clarifies that a claim for compensation must be made on or before the last
working day before settlement.
* The definition of a working day has been extended to allow an additional 10
days for a purchaser to approve a Land Information Memorandum (LIM) if the LIM
condition would otherwise have fallen due over the Christmas/New Year period.
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Buying a vehicle - is there money owing?
If you are in the process of purchasing a vehicle
privately, it is very important to check that there is no money owing on it.
This can be done by conducting a search of the Personal Property Securities
Register ("PPSR"), preferably on the day you are going to pay for the car. The
PPSR will confirm whether a 'security interest' is registered against the
vehicle.
If there is a security interest registered, another person or company could
seize your vehicle to pay off any debt relating to that security interest.
Even if this debt was incurred by a previous owner, you could still lose your
vehicle if the previous owner has failed to repay the debt in full before
selling to you.
If there is money owing on the vehicle, the PPSR will record the details of
the creditor, and you should ensure the debt is cleared before you buy. That
way you can be sure you are buying your vehicle outright.
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If you have any questions about the newsletter items,
please contact me, I am here to help.
Simon
Scannell
S J
Scannell & Co - 122
Queen Street East, Hastings
4122
Phone:
(06) 876 6699 Fax: (06) 876 4114 Email:
simon@scannelllaw.co.nz
All
information in this newsletter is to the best of the authors' knowledge true
and accurate. No
liability is assumed by the authors, or publishers, for any losses suffered
by any person relying directly or indirectly upon this newsletter. It
is recommended that clients should consult S J Scannell & Co before
acting upon this information.
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