Given increasing concerns about insolvency, when negotiating the terms
of a new lease L should consider asking T to provide a rent deposit (or
perhaps a guarantor). However, it is important that any rent deposit
should either be held on a trust basis (ie L holds on trust for T), or on a
charging basis (ie the deposit remains the property of T but is charged
to L). If the rent deposit deed only gives L contractual rights then L is
likely to be treated in the same way as any other unsecured creditor in
the event of T’s insolvency. Moreover, if T is in administration then L will
require the permission of the court or the consent of the administrator
to enforce any security.
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