Relief for the Distressed Landlord

Jason Teoh offers an antidote against errant tenants

INTRODUCTION

An errant tenant is every landlords nightmare. When faced with a situation where
the tenant neglects or refuses to pay outstanding rents, many landlords make the
mistake of resorting to self-help measures such as locking the tenant out of the
premises or forcefully evicting the tenant. More often than not, such landlords find
themselves sued for trespass by the errant tenant instead.

Section 7(2) of the Specific Relief Act 1950 specifically requires a landlord to
obtain a court order before he can recover possession of the property from a tenant.
The question then is what are the legal remedies available to a distressed landlord
when his tenant refuses to pay rent but continues to occupy the premises.

DISTRESS ACTION

One of the remedies available to a landlord against a tenant who falls into arrears
in payment of rent is to levy distress for rent in other words, sending in the court
bailiff to seize and sell the tenant's goods in satisfaction of the arrears.

The landlords right to distress is governed by the Distress Act 1951 (the Act).
Section 5(1) of the Act permits a landlord to apply to a Judge or a Registrar for the issue
of a warrant of distress to recover rent due and payable to the landlord by a tenant of
any premises for a period not exceeding 12 completed months of the tenancy
preceding the date of the application.

THE PROCEDURAL STEPS

When a tenant fails to pay any rent due to the landlord, the first step is for the
landlord to make a demand on the tenant for the overdue rent to put the tenant on
notice that unless the outstanding rent is paid, the landlord may resort to legal action
to enforce his rights. If the tenant does not pay the outstanding rent, the landlord may
apply to the court for a warrant of distress ("Writ of Distress"), through his solicitors.
 As an application for a Writ of Distress can be made on an ex parte basis, the
tenant need not be forewarned of the steps taken by the landlord to recover overdue
rent. The landlord is required to file an affidavit to state the grounds for his application.

A Writ of Distress confers authority on the bailiff to use reasonable force to enter
upon the demised premise and to impound goods to the value of the rent owed, so as
to compel the tenant to pay up. The landlord may be required to pay into court such
sum of money as the court considers necessary to cover the fees and expenses of the
bailiff.

The bailiff is required under the Act to immediately make an inventory and
approximate valuation of any property seized under a Writ of Distress. The bailiff will
then issue a notice of the seizure to the tenant and provide him with a copy of the
inventory and valuation. The notice will also inform the tenant of the amount due under
the writ and that the property seized will be sold at a time and place specified in the
notice, unless the tenant pays the amount due within 5 days from the date thereof, or
obtains an order to restrain such sale.

If the tenant fails to pay the amount due within the stipulated time or to obtain an
order to restrain the sale, the bailiff will sell the property seized by public auction. The
proceeds of sale will be applied first, in payment of the bailiff's fees and expenses and
thereafter, in satisfaction of overdue rent and costs. Any balance must be returned to
the tenant.

A distress will be lifted upon the tenant paying the arrears of rent in full or to the
satisfaction of the landlord.

ADVANTAGES OF A DISTRESS ACTION

Firstly, a distress action is a relatively straightforward proceeding.

A landlord may distrain for arrears of rent even after the determination of the
tenancy provided that the tenant is still in occupation of the premises or if the goods of
the tenant are still on the premises.

Another interesting feature of a distress action is that Section 20(1) of the Act
gives the landlord priority for payment of an amount up to 6 months rental over
moneys owed by the tenant to other judgment creditors who may have attached the
tenant's property for the recovery of judgment sums before the landlord has executed
his Writ of Distress. This priority is nevertheless subject to any prior claims by the
Federal Government or any State Government.
 DISADVANTAGES OF A DISTRESS ACTION

A Writ of Distress does not terminate the tenancy. Accordingly, if the tenant
subsequently fails to pay rent, the landlord may have to resort to yet another distress
action to recover his dues. Further, a distress action could be a lengthy and costly
exercise if the tenant contests the action.

A landlord should also be cognizant that certain goods are exempt from seizure
under Section 8 of the Act. They include (a) the tenant's necessary wearing apparel and
necessary bedding for himself and his family; (b) tools and implements where there is
other moveable property in the premises sufficient to cover the amount due and costs;
and (c) goods in the tenant's possession which are to be dealt with in the ordinary
course of his trade or business.

Wrongful seizure of goods will expose the landlord to an action of trespass by

lawful owners of the goods.

It should also be noted that the amount recoverable under a distress action is
limited to 12 months' rent.

CONCLUSION

Notwithstanding that there are risks involved in a distress action, it is usually an

effective tool for a distressed landlord to recover arrears of rent from an errant tenant if
the tenant has sufficient seizable assets in the demised premises