Checklist for Rent Review Provision Rent review 1.
What method of rent review should be chosen: (a)
agreement;
(b)
arbitration;
(c)
index numbers
Should the rent review be compulsory. 2.
How frequently should there be rent reviews during the lease and renewal terms�
3.
How far before each review date should the rent review process commence? In this regard: (i)
Which party should commence the process?
(ii)
How should it be commenced?
(iii)
Should the lessor be required (or entitled) to nominate the rent which the lessor would accept during the review period?
4.
Should there be one or more persons appointed as arbitrators?
5.
Who should make the appointment?
6.
Who should be nominated? (a)
7.
8.
should the nominee be a qualified valuer, for a specified period of years, and member of the New Zealand Institute of Valuers, or a barrister of more than five years’ standing, or someone else?
What should be the consequences of a rent review not having been initiated in time: (i)
within a review period;
(ii)
after the commencement of a renewed term;
(iii)
within the last six months of the lease (where it is, or is not, followed by a renewal?).
Should criteria for rent review be specified in lease provision, for example: (a)
reasonable rent;
(b)
market rent;
(c)
extent of premises and interests to be valued;
(d) should lessee’s improvements and fixtures be regarded/disregarded, when permanent or required to be removed at end of lease term;
9.
10.
(e)
should lessee’s use of premises and goodwill be disregarded in rent review;
(f)
should lease conditions, restrictions and duration of lease/option be taken into account;
(g)
should arbitrator determine criteria or material considerations, within specified guidelines?
Consequences of transfer or surrender occurring after rent review instituted and not yet finalised: (a)
should assignor and assignee be bound by each other’s conduct during rent review;
(b)
what conditions/security can be imposed at time of transfer as a condition of the lessor’s consent to the transfer, so as to protect the lessor, assignor and assignee;
(c)
how should the lessor be protected in the event of accepting a surrender of lease?
How should the possibility of a delayed determination of rent on a rent review be adequately anticipated in the lease provisions: (a) precisely when should any accrued liability be payable, ie. on the next rent day or at some other date; (b)
can it be paid by instalments, if so in how many instalments and when should they be due;
(c)
is interest due, at what rate, how should it be calculated (simple or compound), when is it payable;
(d)
do current instalments of rent continue to be payable, or should they be increased by a percentage or according to the Consumers’’ Price Index until the new rent is determined;
(e)
if rent is reduced and the lessee has paid excess amounts, is the lessor liable to pay interest to the lessee on that excess?
11.
Who should bear the costs of the review? Should there be special provision if the rent is eventually reduced?
12.
On a rent review at the commencement of a renewal term should the lessee be entitled to cancel the exercise of the renewal if the rent substantially exceeds the rent payable at the end of the preceding lease term and on what basis should the lessee have that right.
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