𝗔 𝗟𝗔𝗡𝗗𝗟𝗢𝗥𝗗’𝗦 𝗚𝗨𝗜𝗗𝗘 𝗧𝗢 𝗥𝗘𝗖𝗢𝗩𝗘𝗥𝗜𝗡𝗚 𝗥𝗘𝗡𝗧𝗔𝗟 𝗔𝗥𝗥𝗘𝗔𝗥𝗦 𝗜𝗡 𝗠𝗔𝗟𝗔𝗬𝗦𝗜𝗔
A landlord’s worst nightmare is having to constantly remind his tenant to pay rent. Even with repeated reminders, the tenant’s promises to pay are often empty or accompanied by bounced cheques. The following are steps to recover the rental arrears:
Issue a Letter of Demand
- This serves as a warning to the tenant to pay up before legal action is commenced. Landlords can issue a letter of demand on their own; however, if the letter is issued under a law firm’s letterhead, tenants tend to take it more seriously (tried and tested!).
Commence Distress Action
- The landlord or his agent will have to apply to the Court for a warrant of distress. This is essentially a warrant authorising entry into the rented premises to seize the tenant’s property for sale, unless the tenant satisfies the debt within five (5) days or obtains a court order restraining such sale. The tenant will be notified of the time and place where the seized property will be sold.
- To apply for a warrant of distress, there must be a subsisting landlord-tenant relationship.
- The rental due must be certain. Therefore, it is essential to have a properly drafted tenancy agreement to avoid ambiguity.
- Only rent from the past 12 months can be recovered through a distress action — so act quickly!
- The rent must be in arrears at the time the warrant of distress is applied for. For example, if the tenancy agreement provides that rent is due on the 7th of each month, the rent is only considered in arrears on the 8th. Note that if the landlord agrees to a grace period or an extension of time to pay rent, then the rent is not due until that period is over.
Sale of the Seized Asset
Movable property found on the premise may be distrained if, in the judgment of the bailiff, it is sufficient to realise the rent due. However, Section 8 of the Distress Act specifically excludes the seizure of certain movable properties such as:
- things in actual use in the hands of a person at the time of the seizure;
- the tenant’s apparel and necessary bedding for himself and his family;
- goods which are used by the tenant for the purposes of his ordinary trade or business;
- goods belonging to guests at an inn; and
- property belonging to the Government or local authorities.
In addition to the above steps to recover rental dues, landlords should also ensure that they have a properly drafted tenancy agreement from the start. The tenancy agreement should identify:
- The parties involved (Who is the landlord? Who is the tenant?)
- Whether there is any late payment interest
- Default and termination clauses
- The right to recover legal costs and expenses
- Security deposit set-off clauses
- A notice and service clause. This clause sets out how formal notices or communications between the landlord and the tenant must be given and when they are deemed to have been received
- An acknowledgement of debt clause
Dealing with tenants can be problematic but make sure to take action fast before it is too late. Taking swift action also shows the tenant that you are serious, so they better pay up.
How can we help you?
For Landlords:
- Issue letter of demand.
- Apply for writ of distress.
- Attending to the distress action.
For Tenants:
- Replying to the letter of demand.
- Advising you on your next steps.
- Applying for a discharge or suspension of the warrant of distress.