COMMERCIAL LEASE BONDS

What is a lease bond?

A lease bond is a contract between three parties: (1) landlord, (2) tenant, and (3) surety underwriter. The lease bond may be held by the landlord in lieu of a cash security deposit, letter of credit, or a personal or corporate guarantee. It serves as security for the tenant's full and complete performance of the lease.

Why choose a Commercial lease bond?

Deposit bonds have been used to purchase property in Australia and New Zealand for over a decade. Bonds are 100% guaranteed by Strategy Insurance Limited (Insurer). They allow the tenant to get back almost 98% of their commercial bond money and provide extra cash flow for their business.

How the lease bond work?

Propex will identify and review the tenants’ assets and general business history. Based upon this review, we issue a lease bond in exchange for the payment. The landlord holds the lease bond, in the same way as the landlord would hold a letter of credit.

What happens if the tenant breaches the lease?

If the tenant fails to uphold the terms and conditions of their lease, the landlord may submit a claim against the bond, which is paid by the insurer much like a draw made by the landlord would be paid by a bank under a letter of credit. With a lease bond, the insurer (and not the tenant) is liable to the landlord for the tenant's breach of its lease. The insurer’s liability on the lease bond is strictly monetary.