Abandoned property

How BC law treats it

BC has no general statute governing goods left behind on commercial premises. The Unclaimed Property Act, SBC 1999, c 48 deals with dormant money and intangible property, such as deposits, credits and uncashed payments, which holders may transfer to the BC Unclaimed Property Society. It does not set rules for furniture, equipment or inventory a tenant leaves in a unit. When a commercial tenant vacates and stops paying rent, the landlord must decide whether the tenant has repudiated the lease. Under Highway Properties Ltd v Kelly, Douglas & Co, [1971] SCR 562, the landlord can keep the lease alive and sue for rent as it falls due, relet on the tenant's account, accept the surrender and end the lease, or terminate and claim damages for the loss of the rent for the rest of the term, subject to the duty to mitigate. The choice should be made deliberately and recorded in a written notice. Goods left behind remain the tenant's property, or the property of a secured lender or equipment lessor, until the lease or the law says otherwise. Most commercial leases contain a clause allowing the landlord to remove, store or dispose of goods left after the tenancy ends. Without such a clause, a landlord that sells or destroys the goods risks a claim in conversion. Distress for unpaid rent under the Rent Distress Act, RSBC 1996, c 403 is a separate remedy with its own procedure, and it is generally exercised while the tenancy continues. Warehouse operators and repairers have their own statutory sale procedures under the Warehouse Lien Act and the Repairers Lien Act. Abandonment does not affect title to land. A registered owner keeps title however long the land sits empty, because title passes only by a registered transfer under the Land Title Act.

What it means for your business

Landlords lose money when they guess wrong. Treating a vacancy as a surrender can wipe out the claim for future rent, while throwing out goods can expose the landlord to a conversion claim by the tenant or its secured lender. Tenants who walk away remain liable for rent and damages and may lose valuable equipment. A clear lease clause on abandonment and abandoned goods, plus a PPSA search before disposing of anything, protects both sides and lets the premises be relet quickly. Example: A Burnaby restaurant tenant stops paying rent and leaves its kitchen equipment behind. Before reletting, the landlord sends a written notice electing to terminate and claim Highway Properties damages, searches the Personal Property Registry, and finds the ovens are leased from an equipment financier, which then arranges to collect them.

Risks and common mistakes

Changing the locks and reletting without first deciding, in writing, which Highway Properties remedy the landlord is electing. Selling or discarding a tenant's goods without a lease clause authorizing it, which invites a claim in conversion. Ignoring secured lenders and equipment lessors whose interests in the goods appear on the Personal Property Registry. Assuming the Residential Tenancy Act abandonment rules apply to a commercial unit. Relying on the Unclaimed Property Act for physical goods, when it covers only money and intangible property.