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When signing up the current tenant for a warehouse, there were a number of changes to clauses, basically to do with the tenant removing an office area in the warehouse. These amendments were made on the agreement to lease, and signed. However the amendments were not transferred over correctly to the deed of lease. Which document is legally binding - or carries more weight?
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Agreement to lease ...Originally posted by jcmk View Post -
Beano will be right, but who transferred the conditions over?Originally posted by jcmk View PostSquadly dinky do!Comment
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Our lawyer I'm pretty sure. The deed of lease was sent to the tenants lawyer, but took over 6 months to land back on our lawyers desk.Comment
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The Agreement to Lease should prevail regarding removal of the office area. Clauses like that don't necessarily have to be transferred into the Deed of Lease if they cover things that happen, eg removal of office area, prior to the term of the lease starting.Comment
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The removal of the office occurred after the lease started - basically on the day that the tenancy started.
In the agreement the tenant deleted part of the clause that states 'before any alterations are made the tenant should provide plans and specifications" However they did submit a plan, which showed that they intended to remove the 2 walls of the office, floor and ceiling.
However sitting above the office was part of a non consented mezzanine and attached to one of the walls was a set of stairs that gave access to the mezzanine
The contentious situation that has arisen is that we as the owner of the building and viewing the plans that the tenant submitted were not aware that the stairs were not going to be demolished, and instead relocated to another wall in the warehouse, that would still allow access to the small remaining area of non-consented mezzanine.
The first rent review occurred in Feb this year, which is when the tenant suddenly raised the issue of the non consented mezzanine. We have had building "experts" i.e. builders/building inspectors who all think that the tenant in relocating the stairs should have approached the local authority for an exemption to consent. I feel that is why they deleted the sentence stating that they had to provide plans and specs. We are pretty sure that the tenants have known all along that the mezzanine was not compliant, as they are involved in the building industry, and they are using this as leverage in negotiating a new rent.
As insufficient information was supplied with regards to what the tenant intended to do - can we ask that the mezzanine above the office (which was the structure that we had agreed on) and the stairs be reinstated?Comment
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In the agreement the tenant deleted part of the clause that states 'before any alterations are made the tenant should provide plans and specifications"
Did you agree to this?Squadly dinky do!Comment
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Yes we did.Comment
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They might not have to provide plans and specs, but you haven't said they deleted the bit where they have to get your consent to alterations...and they should still have to tell you what they are doing to get that consent. If they didn't ask for consent to demolish the mezzanine and shift the stairs then quite possibly they had no right to do so. If that line of thinking is correct and there is nothing else in the agreement or conversations between the parties, you could require the mezzanine and stairs to be reinstated.Comment
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Thanks Ivan
The clause stated "The landlord agrees that the tenant can remove the workroom in the warehouse. All works must be carried out ............... and then deleted the sentence regarding providing plans etc.
For some reason they did provide a plan - which our lawyer sighted and was happy that it was signed off.
However since it has become an issue - in discussions with our lawyer I stated "that the lawyer was aware that removal of the warehouse meant removal of 2 walls, floor and ceiling of the workroom, but he was not aware that there were stairs attached to one wall giving access to the mezzanine structure above the workroom". In other words because of insuffficent/inaccurate information provided to our lawyer from the tenant via the leasing agent, there was no discussion between the parties regarding what was going to happen to the 2 structures associated with the workroom.
In May of this year we were in the process of gaining entry to the warehouse to remove the stairs and remaining mezzanine, so as to reinstate the area as depicted on the plan submitted by the tenant. The tenant agreed until the contractors were actually on-site and then demanded that they leave the property.
Our lawyer's concern is the Notice to Fix that we have been issued.
In another post that I have going - the NTF is the concern - but if we remove the stairs thus removing the means of accessing the non-consented mezzanine the building can no longer be considered dangerous. I'm of the understanding that although the mezzanine was not consented - if it is not being used it does not pose a danger we just need to argue with the council regarding the legality of the NTF.Comment
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Don't think I can comment on the NTF and what Council might or might not be happy with; John the Builder might know more.
Doesn't that leave you with the problem that the lease as written includes the mezzanine as leased area, but you'll be removing access to it? The tenant demanding safe and compliant use of the mezzanine, isn't it?Comment
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Thanks Ivan
The problem really started with the leasing agent as we assumed that he knew that the mezzanine was not compliant - and he stated to the co-owner of the building "the prospective tenants will want permission to remove the workroom and does not require the mezzanine" Unfortunately we do not have a paper trail of this conversation. Thus with the submission of the plans which didn't indicate that the stairs would be relocated to allow continued access to the remaining mezzanine area, we assumed that the stairs would either be demolished or stored in a back corner of the warehouse re:reinstatement clause.
If they had shown the intended relocation of the stairs - there would have been conversation between our two parties regarding the compliance of the remaining mezzanine area. The tenant was asking permission to remove the workroom which rented at $150/sqm (50 sqm) The original mezzanine area was 73sqm with 23sqm now remaining. To make the remaining mezzanine area 23sqm compliant is an extremely expensive exercise and if we had had the conversation during agreement discussions, we would not have agreed to losing an area with a much higher yield in exchange for making an area with a much lower yeild $45/sqm compliant.
When the issue was first raised by the tenant in Feb this year, we immediately offered to take that area out of the rent calculation. The tenant wasn't interested in this. As the John the Builder stated - our tenant is a gold digger as they are insisting that the 23sqm of mezzanine is essential for the running of their business.
Your earlier comment:
If they didn't ask for consent to demolish the mezzanine and shift the stairs then quite possibly they had no right to do so. If that line of thinking is correct and there is nothing else in the agreement or conversations between the parties, you could require the mezzanine and stairs to be reinstated.
if we took this argument to the tenant - then maybe it may jolt them into having a reasonable discussion with regards reduction in rent and no rent review (which was due last Feb)Comment
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Yes that's right - the mezzanine is included in the lease.Originally posted by Ivan McIntosh View Post
The workroom that was removed was 50sqm.
On the real estate agency form the real estate agent made the following adjustments to reflect the removal of the workroom.
The total office area was reduced by 50sqm
The warehouse area was increased by 50sqm
However the mezzanine was left unaltered, at 73sqm, although now there is only 23sqm in the building.
Are we legally able to say that because of the figures on the real estate agency agreement, which the tenant would have viewed, we can state that we would like the 50sqm of mezzanine reinstated?Comment
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