Landlord’s right to draw down bank guarantees supported

Landlord’s right to draw down bank guarantees supported

Posted on Thursday, April 04 2013 at 12:03 PM

A decision in the Victorian Supreme Court has backed the conditional right of a landlord to draw down funds from a tenant-provided bank guarantee.

ruling has cleared the way for the landlord to use the funds to restore their
commercial premises.

court heard that a dispute had occurred over the condition the property was
left in by the tenant on completion of the lease.

claim was also made that the tenant was maintaining occupation of the premises
and was still required to pay rent.

the landlord drew funds down from the bank guarantee, the tenant sought an
injunction from the court to prevent the funds being used until after a pending
trial on the matter.

court ruled that the landlord was entitled to use the money towards repairing
loss or damage to the property.

decision recognised that the bank guarantee was less than the landlord’s
potential claim for damages and they had capacity to pay back the guarantee if
they were ruled against in any subsequent action.

to law firm Allens, the decision will make it difficult for tenants to prevent
landlords from using bank guarantee funds if they aren’t acting fraudulently.

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