I have a fixed-term tenant who is using the (residential) rental as a massage clinic. Now that the fixed-term is over, the tenant is requesting for
another two years of fixed-term tenancy. I read from the template tenancy agreement that the property has to be used principally for residential
purposes. That is not the case here. I do want to keep her as a tenant. If I sign the fixed-term agreement as it is, would that be
voided because I have knowledge of her not using the property for residential purposes? If I do not sign the fixed-term agreement, would the
tenancy roll over as a periodic tenancy? Should I sign a commercial tenancy agreement with her in this case?
The Residential Tenancies Act and the standard tenancy agreement are for properties that the tenant mainly use as a place to live. However, under the standard
agreement allows tenants to also use the property for a business, as long as this is not the main use of the property. There may also be Council requirements
around how the business can be operated on a particular property and whether the property can be used to operate a business.
If a tenant wishes to use a property to operate a business as well as a place to live, we recommend that the landlord should take advice from their lawyer
and their local Council on how to modify the Tenancy Agreement to comply with the relevant Council requirements. If the tenant uses the property solely
for a business, then the landlord should take advice about whether a commercial lease may be more appropriate.
A fixed term tenancy becomes periodic unless one of the parties gives notice to the other before the fixed term expires.
Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matters and should not be relied upon for that purpose.
Campbell is a Solicitor at Duncan King Law, after graduating from the University of Otago in 2013,
Shaun has been acting for clients on a broad range of commercial and property matters, from conveyancing and subdivisions to commercial leases and
business transactions. Click here to email Shaun.