When commercial tenants vacate, a common issue faced by property managers is the items they leave behind. These items can include:
- Fitout such as partitioning, desks, shelving etc
- Air conditioning units
- Alarms, camera and video monitors
- Left over stock such as clothing or point of sale material
- Light boxes, signs and antennae.
Sometimes, particularly if the tenant has left in a hurry or has been evicted, these items can be significant such as the contents of a fully fitted restaurant, motor vehicles and other valuable items of equipment.
These items then become a problem for various reasons. The former tenant may not be in a position to collect them due to logistics or cost. The premises may be unsuitable to re-let whilst these items remain on site.
The landlord has various obligations under law around these items and generally cannot simply dispose of them. There various ways to resolve this issue.
What do the respective commercial Leases say in relation to this matter?
In the 2016 R.E.I.V. lease, clause 10.2 states:
“If the tenant does not comply with clause 10.1(a) the landlord or the managing agent may dispose of the tenant’s fixtures and fittings and goods in the manner permitted by the Australian Consumer Law and Fair Trading Act 2012 for the disposal of uncollected goods.”
Whereas the 2014 Law Institute of Victoria Lease is somewhat different and states:
“If the tenant leaves any tenant’s installations or other tenant’s property on the premises after the end of the lease, unless the landlord and tenant agree otherwise -
5.1.3 all items of tenant’s installations and tenant’s property will be considered abandoned and will become the property of the landlord, but the landlord may remove any of the tenant’s installations or other property of the tenant and recover the costs of removal and making good as a liquidated debt payable on demand; and
5.1.4 the parties intend that clause 5.1.3 operate in relation to tenant’s installations and tenant’s property in place of any legislation that might otherwise apply to goods remaining on the premises.”
The reader’s discretion is advised with regard to the ability to contract out of clause 5.1.4 above.
The Australian Consumer Law and Fair Trading Act 2012 (which can be found here) deals not only with commercial leased premises, but goods held in general such as those left for repair. It covers residential tenants, second hand dealers and the like. Sections 58 - 62 deal with low value goods under $200 which can be disposed of after giving the tenant 28 days notice. Medium value goods up to $5,000 also require that 28 days notice be given to the tenant, but the items need to be sold privately or by auction. High value goods over $5,000 also require that 28 days notice be given to the tenant and private sale or auction of the goods must occur but additional conditions apply.
In some instances, the fitout or items of equipment are listed by priority creditors in the form of a Purchase Money Security Interest (PMSI) on the National Personal Property Securities Register (PPSR). More information on this process can be found here.
These items cannot be disposed of until the creditor is contacted and arrangements made for collection. Not every item is subject to a PMSI. Drinks fridges, coffee machines and the like can be left on site, however the suppliers details are often listed and they will make arrangements to collect their goods when notified.
Regardless of the obligations, it is important to dispose of these goods promptly to avoid prolonged vacancy and issues with misrepresentation to prospective new tenants.
It should be noted reinstatement of the premises is a separate issue to the one addressed above.
At GormanKelly, we take care of ensuring your tenant’s goods are properly dealt with upon vacating as part of our standard property management service to you.
Written by Ann Magee
Ann is a career property manager who is dedicated to her profession and industry and is recognised and highly respected for her delightful approach.