In May 2020 temporary law changes were made to the Property Law Act 2007 (“the Act”) as part of the COVID-19 Response (Further Management Measures) Legislation Act 2020. These changes related to leases of commercial properties and all residential and commercial mortgages; including mortgages related to goods (e.g., Business assets other than land and buildings). These temporary law changes are outlined below.
Commercial Leases: the period in s.245(1)(a) and s.245(3)(c) of the Act, which was 10 working days, was extended to 30 working days. This means that a landlord cannot exercise their right to cancel a lease due to unpaid rent of the tenant which has been in arrears for no less than 30 working days – and if a landlord does give notice to exercise their rights, the tenant has 30 working days after the date of service to remedy their breach. The best approach is for all parties affected to work together productively to find a solution that is feasible and will meet all parties needs and interests.
Mortgages: the notice period under s.120(1)(c) of the Act, which was 20 working days, was extended to 40 working days. This means that if a lender intends to give notice under s.119 of the Act, which is giving notice to the borrower that they are in default and outlining the action required to remedy the default, the period that the borrower has to remedy the default is currently not shorter than 40 working days after the date of service of the notice.
To give a brief background to these temporary changes: the Prime Minister, with the agreement of the Ministry of Health, utilised the special powers provided under section 5 of the Epidemic Preparedness Act 2006 to declare that the effects of the COVID-19 outbreak were likely to disrupt or continue to disrupt essential governmental and business activity in New Zealand. The result of this was The Epidemic Preparedness (COVID-19) Notice 2020. An Epidemic Preparedness Notice is something governmental agencies can use to assist them to respond swiftly, and in this instance, to the continually evolving COVID-19 pandemic.
Since the Epidemic Preparedness (COVID-19) Notice 2020 was first issued, it has been reviewed every 3 months by government resulting in it being renewed each time. It was last reviewed on 12th June 2022 and is effective from 16th June 2022 through to 16th September 2022, when it will be reviewed again. The next renewal review is due mid-September and will be notified to the public by way of an official notice on www.gazette.govt.nz.
Therefore, any temporary law changes made under the Epidemic Preparedness Notice, whilst temporary, are still in effect. If you are a landlord, you do need to comply with the current 30 working day period until such time as the Epidemic Preparedness Notice is not renewed and comes to an end. The same goes for lenders having to comply with the current 40 working day period.
