Goods Remaining on Property at the End of a Commercial Lease.

A common problem for commercial landlords are goods left on the property after a lease has ended. Since the tenant left the items it is commonly thought that these goods can be disposed of however the landlord pleases. That is not the case.

When goods are left on a property after the expiry of a lease the landlord becomes an “involuntary bailee”. A legal term for someone who is in possession of another person’s property but does not own it and does not want to have possession. Unfortunately as an “involuntary bailee” you have a “duty of care”, or a responsibility, to take reasonable care of these goods. It has been found that moving the goods to another premise for storage or moving them within the premise is reasonable. Selling them or discarding them is not.

The duty of care can be discharged by two methods:
- Seeking a declaration from the court that the goods have been abandoned; or
- Giving notice to the former tenant with a reasonable time for the retrieval of the goods.

The former is a relatively involved process but ensures that there are no claims to the goods. The latter is a cheaper method but could still be contested by the former tenant. A rule of thumb when choosing a course of action is if the goods are expensive or the true owner could be unaware of their location, such as goods already sold, seek a declaration. If the goods are relatively inexpensive then the latter method should be chosen.

After the duty has been discharged the landlord can dispose of the items as he wishes. It is important to remember that if a landlord tries to charge a former tenant with a storage fee then the landlord is no longer an “involuntary bailee” but instead a “bailee for hire” which changes the “duty of care”. This should generally be avoided.

The final way to ensure that both parties are protected is to have a well drafted lease. In the lease it should stipulate what is to happen to goods left on the premises after the end of the lease. This should include a time frame for retrieval of the items, who will be responsible for the removal and who will be the recipient of the proceeds of sale. A well drafted lease can prevent headaches down the road and is worthwhile investment for all commercial tenancies.

Contact Peter Kletas of DuMoulin Boskovich LLP for your legal needs.

Peter@dubo.com

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