Get 3 Protections When Letting New Tenant Keep Furniture Previous Tenant Abandoned

In these hard economic times in which so many businesses are being forced to shut down, it’s not unusual for commercial tenants to vacate their leased space without warning and leave all of their personal property and furnishings behind. In addition to losing a tenancy, landlords then face the expense of removing the property and preparing the space for the next tenant. However, it doesn’t necessarily have to be this way. As the saying goes, one person’s trash may be another person’s treasure. The property that the previous tenant abandons might actually prove to be a windfall that makes the space more attractive to the new tenant.

The Abandoned Property Win-Win

Removing abandoned furniture costs landlords money; furnishing newly leased space costs tenants money. So, having apparently abandoned furniture already in place can save both sides money. “I’ve recently closed a few transactions where the new tenant not only didn’t mind but actually embraced the idea of taking possession of the furnishings and personal property that the previous tenant had apparently abandoned,” notes a veteran New York City leasing attorney. “In the new tenants’ view, the abandoned property wasn’t a hindrance but a free furniture bonanza saving it thousands of dollars on having to buy new furnishings for the space.”

Guarding Against the Legal Risks

However, letting a new tenant take over what the old tenant leaves behind is not without legal risk. Maybe the old tenant didn’t really abandon the furniture but just left it in place intending to reclaim it later? Or, what if it turns out that the old tenant didn’t actually own the property but merely leased it from a third party?

Bottom Line: While keeping your mind open to the possibility of having new tenants take over personal property tenants leave behind, you must also anticipate and guard against certain legal risks, for instance, in case previous tenants or their creditors and lessors assert ownership rights in that property. Here’s how to create a lease clause providing the three key protections you need, based on language drafted by the New York City attorney who has extensive recent experience in these kinds of arrangements.   

1. Tenant’s Acknowledgement of Personal Property’s Presence

First, guard against the risk of legal claims by the new tenant for failing to deliver the premises in the agreed-to condition. Specifically, have the tenant expressly acknowledge that it understands three things:

• The furniture/personal property is present in the premises;
• Its presence in no way negates the start of the lease term; and
• The lease doesn’t require you to deliver the premises in an empty condition.

Last but not least, include an itemized list of the number and type of each piece of personal property left in the space that the new tenant will take over [Clause, par. a].

2. Tenant’s Acceptance of Personal Property’s Condition

The last thing you want is for the tenant to seek remedies against you if the personal property is poorly constructed, broken, defective, or otherwise damaged. So, in addition to acknowledging its actual presence, you need to get the tenant’s express acceptance of the personal property in its current as-is condition and state of repair without any “representation by, warranty from, or recourse against” you [Clause, par. b].

3. Tenant’s Acknowledgement of Landlord’s Limited Ownership of Property

Last but not least, get the tenant to acknowledge and agree that the personal property was left by the previous tenant and that:  

• You don’t own the personal property;
• You’re not purporting to provide, and the tenant is not being conveyed title to or exclusive possession of, the property; and
• The tenant’s rights in the personal property may be “inferior, subject, and subordinate” to the rights of others, including those of the previous tenant and/or its creditors, lenders, lessors, and lienors [Clause, par. b].