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Rent deposit deed

Landlords of Commercial Property requiring the protection of a rent deposit should be careful to ensure that the arrangement is properly structured and documented.

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Rent deposit deed

To avoid the rent deposit money becoming available for the tenant’s general creditors if the tenant becomes insolvent it should be held by the Landlord on trust for the tenant in a separate deposit account. The rent deposit deed should make it clear how and when withdrawals can be made.

It is advisable to provide for the rent deposit in a separate rent deposit deed in particular because:

  • If the tenant becomes insolvent the liquidator is likely to disclaim the lease. If the rent deposit arrangements are contained in the lease itself they will be included in the disclaimer and the tenant will be released from liability in respect of the rent deposit.
  • If the lease is registered at HM Land Registry it will become a public document so that the details of the rent deposit arrangements could be seen by other tenants.

If you wish to discuss this article or require any advice or assistance in relation to commercial leases then please do not hesitate to contact our commercial property solicitor Jonathan Senior on 0114 2536543.

 

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