What to do with goods that are abandoned by a commercial tenant? Is it a case of “Finders Keepers”?
WHAT TO DO WITH GOODS ABANDONED BY A COMMERCIAL TENANT?
IS IT A CASE OF "FINDERS KEEPERS"?
Many commercial landlords find themselves in a situation where a tenant has vacated the premises and left goods behind. When this occurs, it is important that the landlord follow the steps provided under Part 4.2 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) to prevent a possible adverse claim by the tenant.
When are goods abandoned?
Goods are abandoned where a tenant has not collected, taken delivery, or not given directions as to where to deliver the goods. Goods can also be abandoned where a landlord cannot locate or communicate with the tenant in trying to organise collection or delivery.
However, goods are not abandoned if a landlord has refused to deliver or prevents the tenant from taking delivery. A landlord also has no legal right to block the tenant’s access to the goods, irrespective if the tenant has not paid rent.
Who is responsible for the cost of delivery/storage of the goods?
Generally, the landlord is entitled to receive payment from the tenant of a relevant charge to deliver or provide the tenant access to the goods. The relevant charge can be associated to the cost of delivery, storage and insurance. The relevant charge must also be reasonable.
When can a landlord sell abandoned goods?
Before a landlord can sell the abandoned goods, they must follow specific steps as provided by the legislation to ensure they dispose of the goods lawfully.
In most situations, a landlord should provide the tenant with a written notice of their intention to dispose of the goods. If 28 days elapses since providing the notice to the tenant, and the tenant has not given instructions regarding delivery or directions as to delivery, the landlord may dispose of the abandoned goods.
The notice provided to the tenant must provide the following information:
Description of the goods;
The address where the goods can be collected;
The cost of the relevant charge; and
The date when the goods must be collected
An issue can however occur when mailing the notice to the tenant’s last known address, as the tenant may no longer be there. Therefore, it is uncertain as to whether the notice has adequately been sent to the tenant. If the notice has not been adequately delivered to the tenant by the landlord, the landlord may not be entitled to dispose of any goods after 28 days. Therefore, it is important that the landlord obtain legal advice before proceeding with disposal.
On the other hand, if a landlord makes reasonable attempts but is still unable to locate or contact the tenant to serve a notice, the landlord can still dispose the goods by waiting for a longer time for the period to expire. The period that is required to elapse (which begins from the date the goods became uncollected) depends on the value of the goods as follows:
60 days for goods valued less than $200.00, or in the case of a motor vehicle, valued less than $1,000.00 – low value goods
90 days for goods valued between $200.00 to $5,000.00 – medium value goods
180 days for goods valued more than $5,000.00 or in the case of a motor vehicle, valued more than $1,000.00 – high value goods
When either one of the two conditions are met, the landlord can dispose of the goods or sell them by private sale or public auction. The landlord must guarantee that the goods are sold for the best price. Further, if the goods are of high value, the landlord should check the Personal Property Securities Register to see whether there is a creditor with a registered interest.
The landlord must also keep a written record of the goods and include:
The description of the goods;
The notice document;
The date and manner of disposal;
The name and address of the purchaser if it was sold by private sale;
The name and address of the auctioneer if it was sold by public auction; and
The selling price of the goods
The written record must also be kept by the landlord for six years or they may be fined.
Can a landlord keep the proceeds from the sale?
The landlord can keep the relevant charge associated with the costs of delivery, storage and insurance from the proceeds of sale, but they cannot retain the proceeds for unpaid rent or other claims against the tenant. The remaining proceeds must be deposited to the State Revenue Office as unclaimed money. Legal advice should be obtained as to how to legally maximize relevant charges.
If you are in a situation where you are a landlord to commercial premises and a tenant has abandoned goods, Judicate Lawyers can assist and provide you with the steps to ensure you dispose of the goods lawfully.
Landlords should note that different rules apply for residential properties.
This article is intended only to provide a summary of the subject matter covered. It does not purport
to be comprehensive or to render legal advice. No reader should act on the basis of any matter contained in this article without first obtaining specific professional advice.
For any information concerning this article, please contact Josephine Ziino, Solicitor, Judicate Lawyers – Barristers and Solicitors of Unit 11 / 233 Cardigan Street, Carlton, Victoria, 3053. Her contact details are as follows: