Sometimes when a commercial lease is terminated, the landlord has to deal with goods that have been left on the premises by the tenant.
The question will then arise as to how to rightfully dispose of those goods without incurring any liability to the tenant.
Look to the lease
Your lease might include provisions dealing with how abandoned goods are to be dealt with.
The terms of your lease will become paramount when dealing with goods that the tenant has left behind on the premises after the lease has ended. Your lease should also deal with if and how a tenant can remove any items which they have affixed to the property (fixtures).
When negotiating your lease, make sure that any provisions dealing with abandoned goods are satisfactory to you and offer a clear and efficient way to resolve such issues. Likewise, a tenant should ensure that any clauses dealing with abandoned goods are acceptable to the tenant and not unduly restrictive, unfair or impracticable. A tenant should also ensure that it has the right to remove any fixtures it has paid for (if appropriate).
If the lease does not mention how abandoned goods are to be dealt with, then the Uncollected Goods Act, 1995 (‘the UG Act’) will come into play.
The Uncollected Goods Act, 1995
This UG Act will apply if the parties have not agreed between themselves as to how any abandoned goods will be disposed of.
The procedures for dealing with goods differ under the UG Act depending on the value of the goods that have been left behind.
|Goods up to $100||The landlord may dispose of uncollected goods with a value of less than $100 but must first give the tenant oral or written notice of the landlord’s intention to dispose of the goods and at least 28 days to collect the goods from the date of the notice.
If the goods remain uncollected, then the landlord may dispose of the goods as he or she thinks appropriate.
|Goods between $100 and $500||The landlord may dispose of the uncollected goods if the tenant, the owner of the goods and each person having or claiming an interest in the goods have first been given written notice of the landlord’s intention to dispose of the goods and have had at least 3 months to collect the goods from the date the notice was given.
If any goods still remain to be collected, the landlord may dispose of them by public auction or private sale for a fair value.
|Goods between $500 and $5,000||A landlord can dispose of the uncollected goods if the tenant, the owner of the goods and each person who has an interest in the goods, have first been given written notice of the landlord’s intention to dispose of the goods and given at least 6 months to collect them from the date the notice was given – and a copy of the notice has been published in a daily newspaper circulating generally throughout NSW.
Goods remaining uncollected can then be sold by public auction.
|Over $5,000||The Landlord can apply to the Court for an order authorising the Landlord to dispose of the uncollected goods. A copy of the court application must be served on the Tenant, the owner of the goods and on each other person having or claiming an interest in the goods.|
|Perishable goods||The Landlord can dispose of perishable goods if the tenant has been given oral or written notice of the Landlord’s intention to dispose of the goods and has been given a reasonable opportunity to collect the goods having regard to the perishable nature and condition of the goods.
Uncollected perishables may then be disposed of in such manner as the landlord considers appropriate.
The form of the notices
The notices mentioned in the table above must include the following details:-
- The landlord’s name ;
- A description of the goods;
- The address the goods can be collected from ;
- A statement of the relevant charges due to the landlord in respect of the goods;
- A statement to the effect that the goods will be disposed of unless the items are collected and the relevant charges are paid by the specified date;
- If applicable, a statement to the effect that the landlord will retain an amount for the relevant charges from the proceeds of the sale.
Landlord’s expenses for disposing of the goods
The landlord can claim the following expenses:-
- Any amount agreed on with the tenant as the charges for transporting or storage of goods or for any repairs or other work done in connection with the goods;
- Costs incurred from the date when the notice is given (or the application for a court order is made if over $5,000), to the date when the goods are disposed of, for any storage, maintenance or insurance of the goods.
- Costs incurred for the disposal under the UG Act.
The landlord can recover these costs from the sale of the goods and, if the sale proceeds are insufficient, can recover the amount owing as a debt in a court.
It’s a good idea to act quickly
As soon as you become aware of abandoned goods, it is good practice to :
- Take photos of the goods / fixtures for your records and make a list of each of the items that have been left at the premises;
- Put a sign on the premises containing details of whom the tenant can contact to arrange collection of the items;
- Send a copy of the relevant notice to all known addresses of the tenant;
- Make sure the goods are stored safely;
- Have the tenant sign to collect the goods and for each item being collected. In addition, have the tenant sign to confirm there are no further goods awaiting collection.
This is only a brief summary of the law around abandoned goods in New South Wales.