In our previous posts, here and here, we discussed some of the rules and formalities surrounding a commercial landlord's right to distress when a tenant defaults on rent. In this week's post, we will focus on further cautions to heed before seizing a tenant's goods as a means to recover arrears in rent. A number of these considerations revolve around the timing of events.
Distress must occur within 6 months of the lease term
At the latest, if the tenant remains in possession, landlords have a maximum of six months after the end of the lease term to exercise the right to distress. A landlord must also avoid exercising distraint on the day that rent falls due - only on the following day does the rent become outstanding. Rent that has not yet become due cannot be included in the distress.
No advance notice required
Should the landlord decide to pursue this right of distress, there is no legislated requirement to provide advance notice of it. However, the landlord is obligated to leave notice of the distress on the leased premises.
Distress must occur during daylight hours only
Landlords must commence a distress during daylight hours only. Daylight hours afford the tenant fair opportunity to become aware that action is being taken and to make amends by tendering past due amounts. However, although the distress must begin during the daytime, it may continue past nightfall if necessary.
Proper procedure to be followed prior to sale
Once the goods have been seized, a cure period of five days must pass before the landlord can begin selling the tenant's goods. Before sale, a landlord must also have the goods appraised by two appraisers. The goods must then be sold within a reasonable period of time. Excessive delay could render the distress illegal, putting the landlord at risk of a legal suit by the tenant to recover its damages.
This short article is in no way intended to be a comprehensive guide for levying distress. The distress process is rife with potential pitfalls and it is imperative that a landlord seek legal advice to properly begin and complete a distress.