Tessa Taute
Law Clerk
tel:021473326
mailto:tessa.taute@hobec.co.nz
Qualifications
- LLB, University of Waikato 2026
- New Zealand Diploma in Legal Executive Studies 2024
Contact
- M: +64 21 473 326
- E: tessa.taute@hobec.co.nz
Tessa Taute is a law clerk in Holland Beckett’s commercial and property team.
Tessa joined Holland Beckett in November 2025 as a summer clerk. She recently graduated with a Bachelor of Laws from the University of Waikato, and has joined the Rotorua team to begin her career. She also holds a Diploma in Legal Executive Studies.
Tessa assists with a wide range of commercial and property matters, including residential and commercial sale and purchase transactions, business acquisitions, commercial leasing, subdivisions, financing arrangements, and trust and estate-related matters.
Outside of work, Tessa enjoys spending time with her young family, travelling, and staying active through outdoor activities.
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Before You Sign – What to Know About Assigning a Commercial Lease
Taking over a commercial lease is not the same as signing a new one. An assignment places you into an existing legal relationship with all its history, obligations, and risks.
Assignments commonly arise during business sales or relocations and are often completed under time pressure. However, both incoming and outgoing tenants need to understand that lease obligations do not simply disappear or reset.
The legal framework for lease assignments is found in Part 4 Subpart 5 of the Property Law Act 2007 (“PLA”).
In summary:
The assignee becomes the tenant and assumes the lease obligations.
The outgoing tenant remains liable unless formally released.
Certain covenants are implied in every assignment.
Against that backdrop, here are five key risks every commercial tenant should understand.
1. “Sleeper Rent” – Don’t Assume the Current Rent Is Market
Incoming tenants often assume that the rent currently being paid reflects market value. That assumption can be costly. There is usually no warranty that the rent has not been discounted. If the outgoing tenant negotiated a concession, the next market rent review could result in a significant increase.
Before taking an assignment, confirm:
The review mechanism (market, CPI, fixed increase).
When the next review occurs.
Whether any side agreements or concessions exist.
Never assume the current rent tells the full story.
2. Alterations and Reinstatement – You May Inherit the Bill
Most commercial leases allow alterations with landlord consent. However, many also allow the landlord to require reinstatement at the end of the lease. An assignee steps into the tenant’s position. That means you may inherit reinstatement obligations, even for work you did not carry out.
Before signing:
Review all alteration approvals.
Confirm whether reinstatement has been waived.
Request photographs or a report showing condition of the Premises as at commencement date of the lease (if available).
Clarify the landlord’s expectations at lease expiry.
Dormant reinstatement clauses can become expensive surprises.
3. Maintenance – When Did the Clock Start?
Repair obligations do not reset on assignment. While a tenant is not generally required to put premises into a better condition than required under the lease wording, broad “good repair” clauses can impose significant obligations especially where no schedule of condition exists.
As an incoming tenant, you should:
Inspect carefully.
Review maintenance records.
Confirm what condition the landlord considers acceptable.
If structural or building services issues exist, you do not want to discover them at your cost.
4. Suitability and Compliance – The Lease Is Not the Whole Story
Most ADLS leases state that the landlord gives no warranty that the premises are suitable for the tenant’s intended use. Responsibility for due diligence sits with the tenant.
This includes compliance with:
The Building Act 2004.
Health and Safety at Work Act 2015.
Fire and access requirements.
Seismic strengthening requirements.
Industry-specific licensing obligations.
If compliance issues prevent you from trading, rent will generally continue to be payable. The cancellation provisions in the PLA (ss 245-246) allow landlords to cancel for breach, including non-payment of rent. A premises that “looks fine” may still be commercially unsuitable.
5. Guarantees and Continuing Liability – Assignment Is Not Always a Clean Exit
One of the most misunderstood aspects of assignment is continuing liability. Under s 241 of the PLA, the outgoing tenant remains liable unless released. Directors who have given personal guarantees may also remain exposed until the end of the current term.
This means:
You may remain financially responsible long after selling your business.
Liability can continue for years.
Release should be expressly negotiated as part of the assignment. Without it, assignment does not equal freedom.
Consent to Assignment
Landlords cannot unreasonably withhold consent to assignment (under ss 224 and 226 of the PLA). However, what is “reasonable” depends on the circumstances, including the financial standing and experience of the proposed assignee. Early engagement and full disclosure usually smooth the process.
Practical Takeaway
Assignments of lease can be straightforward but only when approached methodically.
Before signing, confirm:
The true rental position.
Rent review timing.
Reinstatement exposure.
Repair obligations.
Compliance and suitability.
Whether outgoing liability will be released.
A lease is not simply a commercial document. It creates an ongoing legal interest in land. Stepping into that relationship without proper review can expose you to unexpected cost and stress. Careful due diligence at the front end allows you to focus on running your business not resolving avoidable lease disputes.