Friday, January 10, 2014

Abandoned Property

Commercial landlords must often deal with property that is seemingly “abandoned” by a former tenant.  Some of the landlord’s options include keeping the property, selling or leasing the property to third parties, transferring the property to a new tenant or trashing the property.  Before any decision can be made, the Landlord must determine whether the property is truly abandoned by the former tenant, and if it is, whether any third parties have legal claims to the property.

In residential cases, landlords are required by law to send a letter to the former tenant giving a 10 day notice that unless the property is retrieved it will be considered abandoned and disposed of by the landlord.   Commercial landlords are not subject to the same requirement.  However, we recommend that commercial landlords provide a similar notice to their former tenants when property is left at the premises. 

In cases where the tenant does not retrieve the property within the 10 day notice period, we generally advise the landlord to do the following: (1) complete a full inventory of the abandoned property in front of an independent witness; (2) take pictures of the abandoned property; (3) examine the property for evidence of ownership; and (4) complete a UCC search to see if the property is subject to any recorded liens or leases.  If the property is subject to any liens or leases, we recommend that landlord provide an abandonment notice to the secured party.  If the property is not retrieved by the secured party, then we generally advise the landlord that the property is abandoned and can be disposed of at the landlord’s discretion.

Each case of abandonment is different, and a landlord should not dispose of a former tenant’s property without consulting an attorney.  Non-legal factors may impact how the landlord should dispose of the property.  

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