From brief web searching, the UCC code looks complicated and confusing. Please help me understand it in the context of my office lease:
“Tenant grants Landlord a security interest in Tenant’s personal property now or subsequently located on the premises. This lease is a security agreement under the Uniform Commercial Code. Landlord may file a copy of this lease as a financing statement.”
Does a security interest imply money, along the lines of the security deposit? Or does it mean that if something happens (such as…dunno? I don’t pay?) then the Landlord gets to keep my property? I’m not getting it.
What’s This About The Uniform Commercial Code On My Office Lease?
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I asked my friends who own a bookstore about this and while there was some complicated issues they basically boiled it down to this.
The landlord has opted to take a “security interest” in your office lease. As you suspected this means that if you fail to pay your rent the landlord can lay claim to some of the possessions in the office (computers, fax machines, staplers…etc).
The main reason for this is that say you file for bankruptcy yet still owe 2 months rent. The landlord will probably not be able to recoup those 2 months because you will have no liquid assets however by choosing a “security interest” the landlord can lay claim to items on the property to settle your debt.
I hope this helps.
landlords want the maximum protection
available and they can normally believe that
the tenant will have a focus on earning a profit. BUT in case the tenant skips, the
landlord is out some fair $.
In cases like that–or for instance, the
tenant is not a good business person and
is on a 3 yr lease, if for a restaurant,
my favorite example, the equipment
stays till the tenant pays all the rent
due REGARDLESS how much money the tenant can earn!
I am a buyer’s broker–I can for free,
help you further.