LEASE PERFORMANCE BONDS
Lease Performance Bonds
What is a Lease Performance Bond?
A Lease Performance Bond is a guarantee provided by the underwriter in favour of the landlord on behalf of a tenant. In the event the tenant defaults under the terms of the lease agreement the landlord can make a demand on the bond which must then be paid by the underwriter.
Unlike bank guarantees and rental bonds, Lease performance Bonds do not typically require collateral security on behalf of the tenant, rather a simple hold harmless indemnity agreement.
Once a bond has been issued it is irrevocable for the term of the lease agreement (maximum term being ten years). Should the tenant default on their lease obligations the landlord can call on the bond, which is unconditional, payable on demand and without reference to the tenant.
Lease performance Bonds are not available to residential lease agreements.
FAQs
COMMERCIAL INDEMNITY PTY LTD ABN 44 103 983 777
Lease Performance Bonds. It makes good sense.
