Many businesses who enter a retail or commercial lease fit out their premises with their own goods. For instance, partitions and structures to make the premises appropriate for use or something simpler like desks, chairs and a photocopy machine. Below, we look at a tenant’s rights when it comes to leaving the goods on the property.
What Does the Lease Say?
Most leases will contain a make good clause and provide a timeframe in which the tenant must remove their goods. In some cases, a lease will state that the tenant can leave the goods on the premises as part of an agreement with the landlord.
If you have not yet entered into a lease, it’s sensible to try and negotiate lenient terms where you have a reasonable amount of time after the lease expires to remove your goods without penalty. This may not always be practical, however, as the landlord may have arranged new tenants to enter shortly after your lease expires.
Another important clause to look for relates to the removal of the goods if you leave them on the premises for an extended period (or after the lease expires). For instance, the landlord may choose to:
- remove and store the goods,
- require the tenant to pay for storage costs,
- simply dispose of the goods, or
- take ownership of the goods and sell them to make a profit.
It’s also essential that parties determine what the landlord’s goods are and what are the tenant’s.
What Happens if the Lease is Silent?
A lease may remain silent on:
- the process the tenant must follow in removing its goods from the premises, or
- how the landlord will handle a tenant’s forfeited goods in case they are not removed from the premises.
If so, the treatment of the goods will depend on whether they are considered to be fixtures or chattels.
What is a Fixture?
Fixtures refer to items in a premises which are in some way physically secured to the property. From a legal perspective, fixtures will become the property of the landlord at the end of the tenancy. Landlords will usually invest in fit-out works that involve installing fixtures. As the fixtures are the landlord’s property, the tenant cannot remove the fixtures. Whether this will benefit the tenant or landlord will ultimately depend on the value of the fixture.
What is a Chattel?
On the other hand, a chattel is not intended to be a fixed item within the premises. In NSW, if a tenant abandons a ‘chattel’, the landlord does not have the automatic right to remove and dispose of the item. This is because of the Uncollected Goods Act 1995 which requires the landlord to go through a specific procedure to dispose of uncollected goods. For instance, the landlord may need to apply to the court for an order or allow the tenant a period to collect the goods.
Tenants should understand that if they leave goods on the premises, their lease will govern the process for the removal. If the lease is silent, the treatment of the goods will depend on whether they are fixtures or chattel. If you have any questions or need assistance reviewing your lease, get in touch with our specialist commercial leasing lawyers on 1300 544 755.
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