Law Assignment: Module 2 Activity 2 - Lease and Mortgage Issues

This assignment analyzes a legal case involving GCP Ltd and its transactions related to the Creesey Road and Riverdale Road properties. The analysis focuses on a lease agreement with Great North Panelbeaters and Paint Limited, addressing issues arising from property alterations, compliance with statutes, and mortgage terms. The assignment examines the roles and responsibilities of the tenant, landlord, and guarantors, including Mr. and Mrs. Grayson. It also covers unit title and cross-lease provisions, pre-contract and pre-settlement disclosure requirements, and the implications of the Building Act 2004. Furthermore, it assesses the potential conflict of interest and the duty of care owed to the clients. The document provides advice to the client, Mr. Hoover, on the legal implications of the various agreements and transactions, including the lease, loan agreement, and sale agreement. The assignment also addresses the role of guarantors and the importance of due diligence in property transactions.

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Module 2 Activity 2: Instructions
Student’s Name
Course
Professor’s Name
University
Date

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Task 1: Lease
There is a number of issues that would be addressed based on a number of alterations
of property at Unit 84 Creesey Road, Auckland By GCP ltd (“GCP”). The alteration of the
property could result in a number of responsibilities on the Tenant’s side. The nature of the
agreement between the tenants of the building was not a fully qualified covenant. A fully
qualified agreement allows the tenant to make any alterations to some other use only with
prior consent from the landlord. However, the tenant did not obtain some written consent in
order to make some changes on the property.
Additions, alterations, Reinstatement and Chattel Removal: Sub clause 20.1
provides that the occupant shall neither make or allow any alterations to be made or addition
of certain parts of the buildings or alter the external form of the structure without first seeking
consent from the landlord (GCP ltd) on every plan and occasion and specify through written
consent of the landlord for such purposes. In these cases. In this case, the landlord (GCP ltd)
only authorised the tenant to make some changes in the Kitchen area .Therefore, the
ownership of the alterations made in the office area and were not removed by the time of
terminating the lease may pass to the landlord. Since the tenant has failed to reinstate the cost
that would be incurred by the GCP ltd in reinstating the building into its original state within
6 months, shall be recoverable from the tenant through arbitration. Therefore, GCP is not
liable for any loss suffered while making the reinstatement work.
Compliance with Statutes and Regulations: Sub clause21.1 further provides that ,
the tenant shall comply with all the provisions of reinstating the premises among other by-
laws relating to the use of the property by the tenant and will also comply with the provisions
of requisitions such as bank letters issued by a Competent Authority . Therefore, in
According to the Building Act 2004, the Mr. Hoover is not liable of discharging obligations
of GCP ltd as owner, unless there are certain obligations discharged within the premises.

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Sub clause 21.1 (2): If GCP ltd is allowed by any legislation or any proficient
authority to spend moneys for the duration of the new term lease on any improvement or
alteration to the building, it is not the obligation of the tenant under sub clause 21.1 and any
spending might be inappropriate and thus the GCP ltd can determine the new bases of lease to
Mr. Hoover. Any further dispute as to whether or not that the amount spent by the landlord
was an unreasonable amount, then the process shall only be determined through arbitration.
However, if the cost is reasonable, the cost of making any good resulting damage and the cost
of removing the alterations in the Kitchen and office area is a reasonable amount, the GCP ltd
shall not be liable for any loss that would be suffered by the tenants.
10.0: Conditions on Mortgage terms ; Sub Clause 10.2(2) Since , on reasonable
bases that the Mr Hoover does not find the LIM satisfactory , He will give a notice to the
GCP ltd within a period of 14 business days after the day of the agreement , highlighting the
specific matters .However, If Mr. Hoover does not provide a notice he will be considered to
have accepted the LIM .In addition , if through no fault of Mr. Hoover , the LIM is not
available before 14 working days , and GCP Ltd does not provide an extension on request ,
then the condition for the lease shall not be fulfilled Under the provisions of sub clause
10.8(5)
Task 2: Mortgage
Yes, we can act for Tara and Greg Grayson as guarantors however there is a number
of consideration that we shall put in place:
Clause 9.0 Unit Title and Cross lease provisions: Since the property is a unit title, S.144
and 145 of the unit title Act 2010 requires the vendor to deliver a pre-contract disclosure
statement and a pre-settlement disclosure statement, if so requested by GCP ltd,

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supplementary statements. Sub-clause 9.2 provides that if the property is a unit title. The
seller should undertake the following:
(a)The information provided in the pre-settlement disclosure is complete and
authentic.
(b) The disclosure documentations from the vendor is approved by the relevant bodies
under section 147 of the building Act 2010. Any information provided in the
statement shall be apportioned.
The purchase of property at 123 Riverdale Road should be contingent upon the concurrent of
the property. Moreover, the review of further purchase of the assets should provide due
diligence on the property.
(11). Additional information should include:
(a) Information about any earlier purchase of the same property
(b) Any form of agreement that was signed by the previous buyer.
(c) The seller must also provide all the pre-contract disclosure documentation in
accordance with clause 4.0 (Residential withholding tax).
In accordance with sub-clause 4.3 of Residential withholding tax, the right or any
previous arrangements by Mr. Hoover to occupy the property is also fundamental. The pre-
contract disclosure shows that there was no other buyer, but this needs to be confirmed .If the
property was previously sold .If the property is to be sold with tenants, then the seller should
give the occupants 30 days written notice for the termination of their tenancy.
We owe Tara and Greg Grayson as guarantors, the take reasonable care, and that in
these specific circumstances , we also owe the company the duty to act in good faith .Because
the GCP ltd and the bank have already elected to regulate their relationship through detailed

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facility agreements and contractual documentation (bank letter, loan agreement and sale and
purchase of 123 Riverdale property agreement),there is justification to imply into the
association that a duty to take reasonable care for the organisation as well as Tara and Greg
Grayson. However, conflict of interests might arise if our fiduciary duties offer advisory
services and when we try to represent multiple principles of the agreement.