(Nearly) insolvent tenants and protecting commercial landlords
If you are the landlord of commercial property you may find yourself wondering what, if anything, you
should be doing to protect yourself from your tenant suffering an insolvency event. What about the cash bond or bank guarantee, or your property left in the premises for use by the tenant? Are your interests legally secure?
The Personal Properties Securities legislation (PPSA) (which became effective in 2012) requires landlords to take active steps to ‘perfect’ some of their interests under a lease (which may include registration on the public register called the Personal Properties Securities Register (PPSR)), otherwise those interests might ‘vest in’ the tenant upon the tenant’s insolvency and the landlord would join the queue of unsecured creditors. This legal regime only deals with interests called ‘security interests’ in ‘personal property’ (basically any property that is not real estate/fixtures).
Click here to review the main types of security interests a landlord will have under a lease and an analysis of what (if any) steps a landlord should take to protect that interest, including whether they should register on the PPSR.
This article is not legal advice. It is intended to provide commentary and general information only. Access to this article does not entitle you to rely on it as legal advice. You should obtain formal legal advice specific to your own situation. Please contact us if you require advice on matters covered by this article.