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ARTICLE · 18 DECEMBER 2014

Bank guarantees: what all landlords should know

ClarkeKann Lawyers
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A recent NSW decision casts some doubt on the proposition that landlords have immediate access to guaranteed funds.

AustraliaReal Estate and Construction
Joanne Chang
Joanne Chang
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Bank guarantees are often used by tenants to provide landlords under commercial or retail leases with security about the performance of their obligations. Typically, the terms of the bank guarantee will provide for the landlord to have immediate access to the guaranteed funds without having to wait for a Court decision to confirm that the lessee has breached the lease. Joanne Chang, a lawyer in our Property & Projects team, provides a warning to landlords about a possible pitfall.

RECENT CHANGES TO THE LAW

A recent case Universal Publishers Pty Ltd v Australian Executor Trustees Ltd [2013] NSWSC 2021 casts some doubt on the proposition that landlords have immediate access to guaranteed funds: it all depends on how your lease and bank guarantee is worded.

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