Trash or treasure? Which goods can a landlord throw?

Posted: 04/02/2019

When landlords take back possession of their properties from troublesome tenants, they can often be greeted by a mass of goods they do not recognise and immediately want rid of. This can spell trouble for uninformed landlords who then start dealing with such goods as their own to dispose of or sell. Below we explain why a property full of goods is a trap for the unwary and suggest steps landlords can take to come away unharmed.

Involuntary bailment

If goods belonging to the tenant or a third party remain at a property once a lease has been determined, the likelihood is that the landlord will be an ‘involuntary bailee’ of those goods. Bailment is one of the oldest legal relationships but still leaves many scratching their heads. This is particularly so for involuntary bailment which is where goods belonging to another have come into your possession without your consent. It places a duty on you as bailee to do what is ‘right and reasonable’ with the goods (to be determined on a case by case basis) and gives the owner of them a claim in damages if you fail to do so (eg by disposing of without making enquiries).  Such claims can easily run into the tens of thousands of pounds and landlords must therefore be very careful not to expose themselves when clearing a property.

Whose goods are they?

This is the first question a landlord in this situation should ask. Do the goods belong to the tenant or are they goods of third parties (eg stock which has not been paid for, equipment on finance agreements, goods subject to a control of goods agreement). Paperwork at the property may help in answering this question but otherwise it may just be a case of placing a general goods notice on the door of the property (see below) and waiting for the owners to approach you.

Is there a provision in the lease which can help?

If the goods belong to the tenant, most modern leases will contain helpful provisions about how long the tenant has to collect them and what a landlord can do if the tenant fails to take action. Such provisions may override the concept of bailment (if, for example, the lease appoints the landlord as agent of the goods) but if bailment does apply then the lease should make determining what is ‘right and reasonable’ slightly easier in the context of your scenario.

Following the lease provisions usually keeps landlords out of trouble provided that clear evidence of compliance is kept (eg copy letters to the tenant and proof of delivery). However, where goods are particularly valuable, landlords may still wish to take advice and consider whether their proposed course of action should be rubber stamped by a court before they proceed. Goods can be moved to storage while these discussions take place.

Notices under the Torts (Interference with Goods) Act 1977

If there is nothing in the lease to assist or you suspect that some of the goods at the property belong to a third party, a landlord is generally best advised to serve notice in accordance with the Act before disposing of or selling goods.

The best way to understand what the Act provides for is to read it (sections 12, 13 and schedule 1 in particular) as it is very short but, in summary, it references two types of notices:

• a Schedule 1 Part I notice which imposes an obligation on the owner of goods to collect them; and
• a Schedule 1 Part II notice which notifies an owner of your intention to sell goods if they are not collected by a certain date.

It is however common for the notices to be combined and served as one. Landlords should be mindful of the content and service criteria prescribed by the Act.

Sale of goods

If a Schedule 1 Part II notice has been served and the owner of goods has failed to respond, section 12 of the Act gives an involuntary bailee the right to proceed with a sale. The sale needs to be via “the best method…reasonably available in the circumstances” and the proceeds will need to be retained for the owner, less any costs of sale. The Act does not specify the length of time for such retention so, in theory, this will need to be until the limitation period for a damages claim expires (six years). 

If goods are particularly valuable, landlords should consider getting a sale and proposed terms authorised by the court before proceeding. The mechanism for this is at section 13 of the Act.  

Section 12(3)(b) of the Act assists where an involuntary bailee has been unable to serve notice on an owner of goods as they have failed to trace or communicate with the owner after taking reasonable steps to do so.

Disposal of goods

Under the Act
If a Schedule 1 Part I notice has been served and the owner of goods is still unresponsive, the Act does not assist landlords any further with the question of whether the goods can be disposed of.  Instead, a landlord will need to rely on being able to show that they have discharged their duty as an involuntary bailee (ie done what is ‘right and reasonable’) and are therefore free to dispose of the goods.

This can be seen in the case of Da Rocha-Afodu v Mortgage Express Ltd [2014] EWCA Civ 454 in which a mortgagee gave a mortgagor access to collect goods on several occasions and provided several warnings and notices before goods were disposed of.  

Abandoned goods
Alternatively, if it has not been possible to serve a Schedule 1 Part I notice in the first place because a landlord cannot identify the owner of goods after taking reasonable steps to do so, it may be possible to run an abandonment argument. This involves establishing a reasonable entitlement to conclude that no one is interested in the goods and they can therefore be disposed of (see Robot Arenas Ltd v Waterfield [2010] EWHC 115 (QB).

The higher the value of the goods (either in monetary or sentimental terms), the more care a landlord should take.

Does the above apply to rubbish?

Unlikely. Where rubbish is left behind at a property, a landlord should be able to reasonably conclude from the nature of the goods that they have been abandoned and can therefore be disposed of without making any prior enquiries. Landlords have been said to be unconscious bailees of rubbish.

Practical advice

• Always attach a general goods notice to the door of the property after taking back possession.
• If in doubt, store all items, either at the property or in storage, pending the conclusion of your searches and communication attempts.
• Complete a photographic inventory of the goods and/or obtain professional valuations – these can act as important evidence to justify your actions later on.
• When arranging collection of goods with third parties, always ensure that they either have paperwork evidencing their title or have express authority from your former tenant to collect on their behalf. 
• Where goods are of or could be of significant value, seek professional advice from a solicitor on how to deal with them.
• Consider any counterclaim you may have against a tenant. If landlords are owed arrears, they may be less worried about a damages claim in respect of a tenant’s goods.

Related cases we have dealt with recently

• Industrial fridges and shelving units left behind by a tenant following forfeiture by peaceable re-entry. Value and ownership had to be established prior to disposal. We also had to dissuade HMRC from enforcing its control of goods agreement to avoid the re-letting of the unit in question being held up.
• High value modular housing pods and materials located at a warehouse following the exercise of a landlord break right. The goods were claimed by a company in administration and then sold to another third party before being removed. 
• A whole flat of furniture and personal possessions left by a squatter/licencee following the enforcement of a possession order.
• A book collection left behind by a tenant on being evicted.

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