Implied Commercial Tenancy (Lease) Agreements In New Zealand

Most business owners don’t set out to create legal risk with their premises. You find a space, you start trading, you pay what you think is the rent, and everyone’s happy.

But sometimes the paperwork doesn’t keep up with reality. Maybe the “lease” was just emails. Maybe you moved in before the final document was signed. Maybe you took over someone else’s space. Or maybe you stayed after a fixed term ended and just kept paying rent.

That’s where an implied commercial tenancy agreement can sneak in.

In this article, we’ll break down what an implied commercial tenancy (lease) agreement is in New Zealand, how it can arise, why it matters for small businesses, and what you can do to protect yourself from day one.

What Is An Implied Commercial Tenancy Agreement?

An implied commercial tenancy agreement is (in plain terms) a lease arrangement that exists even though you don’t have a formally signed written lease (or the written lease doesn’t cover what’s actually happening).

Instead of relying on one signed document, the “agreement” is worked out from:

• what you and the landlord have said (including emails, texts, letters, and conversations)
• what you and the landlord have done (like handing over keys, moving in, paying rent, accepting rent, doing fit-out works)
• the surrounding circumstances (like advertising the premises, previous lease arrangements, or conduct over time)

In other words: if it looks like a lease and operates like a lease, a court may treat it like there is a lease (even if the paperwork is incomplete).

This is different from a “handshake deal” in the casual sense. An implied arrangement can still create real legal obligations, including:

• how much rent is payable (and when)
• what the premises can be used for
• who pays outgoings (like rates, insurance, body corporate levies)
• repair and maintenance responsibilities
• how either party can end the arrangement

The tricky part is that implied terms can be unclear. And uncertainty is often where disputes (and unexpected costs) come from.

How Do Implied Commercial Leases Arise In Practice?

Implied arrangements are common in the real world because businesses move fast and leases can take time to negotiate. Here are some of the most common scenarios where an implied commercial tenancy agreement can pop up.

1. You Move In Before The Lease Is Signed

This is a classic one. You’ve agreed on the “main points” (rent, start date, term), but the final lease document is still being drafted or negotiated. You take the keys, start fitting out, and begin trading.

If you’re paying rent (and the landlord is accepting it), it can be very hard later to argue “there was no agreement”. A lease-like relationship may already exist.

2. You Stay On After A Fixed Term Ends

If your written lease term ends but you keep occupying the premises and keep paying rent (and the landlord keeps accepting rent), you may move into a holding over situation.

Often, that results in some form of periodic tenancy (for example, month-to-month) or another continuing arrangement on terms that may be influenced by the expired lease and the parties’ conduct. The exact outcome depends on your original lease terms (including any “holding over” clause) and what both parties do next.

If you’re not sure where you stand, it’s worth getting advice early, because your ability to end the lease (or your landlord’s ability to terminate) can change significantly.

3. The Lease Terms Are Unclear Or Only Partly Agreed

Sometimes there is some documentation (like a heads of agreement or a rent schedule), but it doesn’t cover the full deal. The missing pieces may be “filled in” by implication.

This can include big-ticket items like:

• outgoings
• rent review mechanisms
• make-good obligations at the end of the term
• renewal rights

4. You Take Over A Space From Another Tenant

Maybe you’re buying a business and continuing from the same location. Or maybe another tenant “hands over” the space informally and the landlord is aware you’re operating there.

This is where you need to be especially careful. There may be an assignment, a sublease, or an entirely new arrangement implied by conduct. If you’re stepping into someone else’s premises situation, it’s often worth checking whether a formal assignment of lease was properly done.

Why An Implied Commercial Tenancy Agreement Can Be Risky For Your Business

It’s not that implied leases are automatically “bad”. The real issue is uncertainty.

When you have a properly drafted Commercial Lease Agreement, you can usually point to clear clauses about rent, outgoings, repairs, renewals, default, and termination.

When the agreement is implied, you may end up arguing about what was agreed in the first place.

Here are some of the most common business risks we see.

You Might Not Have The Rights You Think You Have

Many tenants assume they have:

• a right to renew
• a guaranteed term (e.g. “we agreed on 3 years”)
• exclusive use of certain areas
• certainty around rent increases

But if those terms were never properly documented, you may not be able to enforce them. This is one reason disputes often arise where there are no formal lease documents in place.

You Could Be On The Hook For Outgoings (Without Realising)

Outgoings can be a major cost for small businesses, especially in retail or office buildings. Depending on what’s implied (or what the landlord says was agreed), you might end up paying:

• rates
• insurance premiums
• common area maintenance charges
• body corporate levies
• utilities or building services

If you’re operating on tight margins, unexpected outgoings can hurt cashflow quickly.

Ending The Arrangement Can Be Messy

With a written lease, the end process is usually clear: notice periods, make-good obligations, handover requirements, and final payments are laid out.

With an implied tenancy, questions like these can become disputed:

• How much notice do you need to give to leave?
• Can the landlord terminate immediately?
• Do you need to “make good” the fit-out?
• What happens to your signage or installed equipment?

And if you’re trying to sell your business, an unclear premises arrangement can also spook buyers (or delay the sale).

Disputes Become “He Said, She Said”

Implied agreements often rely heavily on evidence of conduct and communications.

That can mean digging through email chains, messages, invoices, bank records, and witness statements just to work out what the deal was. Even if you’re “in the right”, the time and cost of proving it can be frustrating.

What Laws And Legal Principles Apply In New Zealand?

Commercial leasing in New Zealand isn’t governed by one single “commercial tenancy act” in the same way residential tenancies are. Instead, the rules usually come from a mix of:

• contract law principles (including how agreements are formed and what terms can be implied)
• property law (including rights around occupation and enforcement)
• the wording of any documents that do exist (even if incomplete)
• general business laws that can impact representations and conduct

Some laws and legal frameworks that can be relevant include:

• Contract and Commercial Law Act 2017 (which consolidates parts of New Zealand’s contract law framework)
• Property Law Act 2007 (which covers various aspects of property and contractual enforcement related to land)
• Fair Trading Act 1986 (which can apply if misleading or deceptive conduct occurs in negotiations or representations about the premises)
• Health and Safety at Work Act 2015 (because as a business, you still need to manage risks in your workplace, regardless of whether the lease is neatly documented)

Because implied arrangements can involve a mix of legal principles, it’s often worth getting advice early rather than trying to “wait and see” what happens.

How Can You Protect Your Business If You Don’t Have A Signed Lease Yet?

If you’re already in the premises (or about to move in) and you don’t have a fully signed lease, don’t panic. You can still take practical steps to reduce the risk and get clarity.

1. Get The Key Deal Terms Confirmed In Writing

Even if you don’t have the full lease document yet, you can reduce uncertainty by confirming key points in writing (email is usually fine). For example:

• the parties (who is the tenant entity?)
• the premises (exact address and area)
• the permitted use (what you’re allowed to do there)
• the rent amount, rent frequency, and GST treatment (note: GST and tax treatment can be fact-specific, so it’s worth checking with your accountant)
• outgoings (what you pay vs what the landlord pays)
• the start date and intended term
• any rent-free or fit-out contribution arrangements

One of the biggest commercial lease fights is over what the tenant can use the space for, so it’s worth being clear on permitted use early.

2. Be Careful With “Temporary” Arrangements

Sometimes landlords offer a “licence to occupy” or a short-term arrangement while the lease is being finalised. That can be legitimate, but it still needs to be drafted properly.

If you treat it like a lease (exclusive possession, regular rent payments, ongoing occupation), a dispute could still arise about what relationship actually exists.

3. Don’t Assume Your Old Lease Terms Automatically Carry Over

If you’re renewing, holding over, or changing premises arrangements, don’t assume your old lease terms apply in the same way.

Even small changes (like paying rent on a different day, changing the area you occupy, or changing what you use the premises for) can create arguments about what terms now apply.

4. Plan For Disruption Events (Even If It Feels Awkward)

Most lease disputes don’t happen when business is steady. They happen when something goes wrong: a downturn, a major repair, a building issue, or an event that disrupts trading.

That’s why clauses around rent relief and interruption matter. If you’re negotiating a lease (or trying to document the arrangement you’re already in), it’s worth thinking about whether a rent abatement mechanism is relevant for your situation.

5. Get A Lease Reviewed Before You Lock It In

If the landlord sends through a lease “for signing”, you’ll want to check that it matches what you’ve actually agreed (and what you’ve been doing).

This is where a Commercial Lease Review can be a smart move, especially if you’ve already moved in, paid rent, or invested in a fit-out. It’s much easier to negotiate before everything is signed and entrenched.

6. If You’re Subleasing, Document It Properly

If you’re renting space from another tenant (rather than directly from the landlord), you’ll want clarity on who is responsible for what and what happens if the head lease ends.

A properly drafted Commercial Sublease Agreement can help avoid disputes about rent, access, outgoings, and termination rights.

Key Takeaways

• An implied commercial tenancy agreement can arise when you occupy business premises and pay rent (or the landlord accepts rent), even if no formal written lease has been signed.
• Implied arrangements commonly happen when you move in before paperwork is finalised, stay after a fixed term ends, or operate based on informal emails and conduct.
• The biggest risk with implied leases is uncertainty - disputes often arise about rent, outgoings, repairs, permitted use, termination, and make-good obligations.
• Commercial leasing issues can involve multiple legal frameworks, including contract law principles, property law, and laws like the Fair Trading Act 1986 where representations and conduct are in dispute.
• You can reduce risk by confirming key terms in writing, getting clarity on permitted use and outgoings early, and documenting any sublease or assignment properly.
• Before you sign (or if you’ve already moved in), getting your lease reviewed can help ensure the written terms match the deal you intended - and protect your business from day one.

If you’d like help documenting your premises arrangement, negotiating lease terms, or reviewing a lease before you sign, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.