Recovering unpaid commercial tenant rents by distraining

By Greg Bell

Distraining is the right of a landlord to enter a property, seize goods and sell them by public auction to compensate for outstanding rent, according to the Landlord and Tenant Act of 1936. The law protects landlords and provides a security against tenants who don't pay their rent.

How does distraining work?

The act of distraining is called a "distraint." The distraint may not be carried out by the landlord unless and until they have completed, signed and served a Warrant to Distrain on their tenant, According to Johnston Withers Lawyers, this process must be completed either by the landlord himself or with the support of a bailiff, and items can only be distrained from the property between 6:00 am and 6:00 pm. The landlord must also make a list of everything they seize and give a copy to the tenant. After five days, they can sell the seized items. If the tenant manages to pay outstanding rent before any or all items are sold, the landlord must return them.

When does distraining apply?

A landlord may only perform a distraint during a lease – the action cannot be carried out retroactively once a lease has expired. It only applies to unpaid rent and, according to Johnston Wither Lawyers, does not extend to outgoings, GST or any other payments.

Distraints can be exercised without any prior notice, and most items on the premises of the property are subject to seizure. Some exempt items include those that belong to a third party, clothes, tools and health records.

How does a landlord collect payment from the sold items?

After seized items are sold, the proceeds belong to the landlord. Any money earned through the sale of those items that exceeds owed rent must be paid back to the tenant.

It is important that, as a landlord, you stay on top of your tenants' rent payments. If you allow them to consistently pay their rent late, you are at a higher risk of not receiving the money owed to you. Luckily, through legal protections such as distraints, you are protected against any losses which may come to you when tenants are unable to pay rent.

If you are interested in purchasing a commercial property in the Gold Coast region, contact Ray White Surfers Paradise to learn more and get started today.

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