If you ever encountered a situation where a tenant did not pay rent and yet still occupying the premises, this article serves as a simple guide of what you may do next.
What is distress action?
Where a tenant does not pay rent, the landlord may apply for a writ of distress which is a court order to direct the bailiff or sheriff to distrain the movable properties of the tenant and sell it to recover the rental arrears.
‘Distrain’ in law means to seize someone’s property in order to obtain payment of rent or other money owed.
How much is the rental arrears claimable?
The landlord’s right to distress is governed under the Distress Act 1951 (‘DA’)
Section 5(1) of the DA says that landlord may only claim up to twelve (12) completed months of the outstanding rentals, immediately preceding the date of application to a Judge or Registrar for the issue of a warrant of distress.
Other than rental arrears, what else can be recovered?
First of all, the landlord must be certain of the rental amount due, the best is to look at the tenancy agreement signed in between the landlord and tenant.
It is also the law that the writ of distress shall allow distrain of any movable property of the tenant which will be sufficient, when sold, to realize the amount of rent therein stated to be due to the landlord, together with such costs of the landlord and the bailiff’s fees and expenses.
Which court to go?
A landlord can either commence the action in
- Magistrates’ court should the total claim amount does not exceed RM100,000 or
- Sessions Court should the claim amount is more than RM100,000.
The Sessions Court has unlimited jurisdiction to try all distress actions under Section 65(1)(a) of the Subordinate Court Act 1948.
What are the procedures?
Basically, the landlord may engage a lawyer to start to issue a letter of demand to the tenant for outstanding rentals failing which will result in Writ of Distress being issued against the tenant.
A writ of distress directs the bailiff to enter, seize and sale the movable properties of the tenant and in a case of deserted premises, the bailiff may enter by using reasonable force.
After seizing any property, the bailiff shall prepare an inventory list and an approximate valuation thereof. Thereafter, the bailiff will serve on the tenant a notice of seizure together with a copy of the inventory list at a time and place named therein, which shall be after a minimum period of six (6) days at least from the date of the notice.
As soon as the amount due under the writ of distress has been recovered by the sale of the properties seized, the balance will release and return to the tenant.
Is there any restriction on what properties are seizable?
Yes. Firstly, there are restrictions imposed under Section 7 of the DA that the bailiff can only seize movable properties of such approximate value to rental arrears.
Secondly, the bailiff cannot seize the tenant’s clothing, tools, and equipment to be used in his trade as well as properties not belonging to the tenant.
A distress action is procedural in nature, efficient and less time-consuming in recovering rental arrears. However, it cannot help the landlord in recovering the premises unless the premises has deserted or abandoned by the tenant.
It is hoped that the Residential Rent Act proposed under the Malaysian Budget 2018 will address the legal needs of the landlords who run into problems with their tenants to provide for a quick solution out of this dispute.
About the Author:
This article is written by Chia Swee Yik, Partner of this Firm (+6016 2148 218, firstname.lastname@example.org) (assisted by our paralegal, Yong Yu Xian) who has provided practical advice on outstanding rental recoveries via distress action.
Feel free to contact him if you have any queries.