A common item of contention between landlords, tenants and third parties at the expiry or early termination of a lease is the ownership of tenant or third party fittings or goods that have been abandoned on the premises.
The Australian Consumer Law and Fair Trading Act 2012 (ACLFTA) provides that where a Lease is silent on the issue of abandoned goods, the conduct of the Landlord must be in accordance with the strictures of the ACLFTA.
The ACLFTA ascribes different requirements depending on whether the abandoned goods are perishable and non-perishable.
Perishable Goods:
The ACLFTA requires that where the goods are perishable and:
- The goods have perished, they can be disposed of;
- The goods have not perished, verbal or written notice is given to the Tenant and reasonable time is provided to collect
Non-perishable Goods
The ACLFTA requires that where goods are non-perishable, the Landlord’s obligations will depend on the value of the abandoned goods.
Low Value Goods:
Low value goods are goods that are valued less than $200 or motor vehicles that are valued less than $1000.
The Landlord must provide the Tenant or Owner of low value goods written notice of its intention to dispose of the goods. The Landlord can then dispose the goods after 28 days if Tenant or Owner does not make arrangements for delivery or payment.
In the event that the Landlord provides notice but the Tenant or Owner doesn’t respond, the Landlord can dispose of the goods 60 days after the date on which notice is provided.
Medium Value Goods:
Medium value goods are goods that are valued at or more than $200 and less than $5,000.
The Landlord must provide the Tenant or Owner of medium value goods written notice of its intention to dispose of the goods. The Landlord can then dispose the goods after 28 days if Tenant or Owner does not make arrangements for delivery or payment.
In the event that the Landlord provides notice but the Tenant or Owner doesn’t respond, the Landlord can dispose of the goods 90 days after the date on which notice is provided.
High Value Goods:
High value goods are goods that are valued at or more than $5,000 or motor vehicles that are valued at or more than $1,000.
The Landlord must provide the Tenant or Owner of high value goods written notice of its intention to dispose of the goods. The Landlord can then dispose the goods after 28 days if Tenant or Owner does not make arrangements for delivery or payment.
In the event that the Landlord provides notice but the Tenant or Owner doesn’t respond, the Landlord can dispose of the goods 180 days after the date on which notice is provided.
Making Provision for Abandoned Goods:
At the expiry of a Lease, the Landlord’s primary concern is to secure a replacement tenant for its premises. If a departing tenant abandons goods when vacating, it will become the Landlord’s problem to clear the premises and have it ready for the new tenant to move in.
If an effective abandoned goods clause has not been inserted into the Lease, the Landlord will have to comply with the ACLFTA procedure, which places undue responsibility and cost on the Landlord to store abandoned goods while they wait for a directive from the departed tenant or owner of the goods.
Where a Landlord disposes of abandoned goods before the times prescribed by the ACLFTA, this may leave them open to a claim from the departed tenant.
It is possible for Landlords to contract out of the requirements of the ACLFTA, however not all leases make provision for the treatment of abandoned goods. It is in the Landlord’s best interests to deal with the issue of abandoned goods at the time of preparing the Lease.
Personal Property Securities Register (PPSR):
The PPSR provides a mechanism whereby a security interests can be claimed over goods and that interest is listed on a public register. A secured interest over a tenant’s goods will defeat any claim to the good that a Landlord may have.
Landlords have to keep in mind that abandoned goods may be registered on the PPSR. It is advisable that searches of the register are undertaken prior to disposing any goods.
What to do next:
Abandoned goods can pose a problem at the expiry of a Lease. If you:
- are currently experiencing issues in this area, or
- are about to enter into a new Lease,
one of the experienced property lawyers at Septimus Jones and Lee can assist you with advising and negotiating this area of law.
This article has been written by Senior Associate, Chris Vlahos and is intended for information only. For specific advice in relation to your circumstances please call Septimus Jones & Lee on 9613 6555.