Landlords have a range of remedies to deal with defaulting tenants. However, a problem that often arises is that landlords often want to simultaneously re-enter the premises and distrain a tenant's property. However, this is unlawful.
Accordingly, the range of remedies include:
holding the tenant to the lease and taking legal proceedings for outstanding rental as and when it falls due re-entering the premises and terminating the lease, and then suing the tenant for 'loss of bargain' damages (ie. rental payable under the lease less rental received from potential replacement tenants) distrain (seizing and selling) the tenant's property held on the premises under the Distress and Replevin Act 1908.A problem that often arises is that landlords often want to simultaneously re-enter the premises and distrain a tenant's property. However, this is unlawful.
The remedy of re-entry terminates a tenancy. Distraint under the Distress and Replevin Act 1908 is only permitted where there is an ongoing tenancy. The two are inconsistent - a landlord can only distrain while the lease is current.
The only exception is where a lease expressly permits the sale of unclaimed property following the termination of the lease.
An example of where a landlord failed to properly follow these procedures is the recent case of Chisgnell v Searle. The tenant failed to pay rent under its lease and had left the premises in a mess. The landlord changes the locks, hoping to persuade the tenant to contact him about the lease. A couple of months later after hearing nothing from the tenant, the landlord arranged for the contents of the premises to be sold at auction. Subsequently, the tenant issued a claim against the landlord for the value of the goods plus other damages. The District Court said changing the locks effectively amounted to re-entry - which terminated the lease. As the lease was terminated, the landlord had no right to seize and sell the tenant's belongings. The Court ordered the landlord to pay the tenant the value of the goods sold.
This article is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this article.
Copyright Phillips Fox, December 2001
For further information contact Gray Thompson: gray.thompson@phillipsfox.com
Web site:
Phillips Fox