- Q: My tenant has failed to pay rent for months. What can I do to recover the rent and possession of my property?
A: If a tenant failed to pay rent, then the following measures are usually available to the landlord:
(a) Action for the recovery of the outstanding rent
If landlords intend only to recover the outstanding rent but not to regain possession of the properties, then they may make their claim for rent arrears at one of the following:
- Small Claims Tribunal: for claims of $50,000 or less
- District Court: for claims that exceed $50,000 but do not exceed $1,000,000
- Court of First Instance of the High Court: unlimited jurisdiction
Landlords of domestic properties should ensure that they have submitted a Notice of Letting or Renewal Agreement (Form CR109) to the Commissioner of Rating and Valuation for endorsement within 1 month of the execution of the tenancy document. Landlords of domestic properties are not entitled to maintain legal action to recover rent under tenancy documents if the Commissioner does not endorse the form. However, landlords who do not submit the form within the 1-month period can do so at anytime after paying a fee of $310.
(b) Action for the recovery of the outstanding rent
If landlords believe that their tenants have absconded or will not be able to pay the rent for the remaining term of the tenancy, then they will probably want to get back the property and recover the rent in arrears. In such circumstances, the landlords are said to be exercising their right of forfeiture and may file their claims at:
- The Lands Tribunal
- The District Court: if the outstanding rent does not exceed $1,000,000 and the rateable value of the property does not exceed $240,000
- The Court of First Instance of the High Court: for outstanding rent of any amount
The landlord, if succeeding in obtaining a judgment against the tenant, will be able to apply to the tribunal/appropriate court for a Writ of Possession. Upon the issue of Writ of Possession, the court bailiff will recover the possession of the property on the landlord’s behalf.
2. Q: What is an Interim Payment?
A: In simple words, “interim payment” is the payment made by one of the parties to the other party in a lawsuit before the completion of the court trial (i.e. before the judge delivers the final judgment on the relevant case). The payee (usually the plaintiff) must first apply to court and obtain the relevant court order before he/she could entitle to interim payment.
Application for interim payment is common in situations where the tenant has been in continuous possession of the premises, refusing to vacate and paying no rent at all. In such situation, the landlord may commence legal proceedings against the tenant for forfeiture of tenancy, damages (compensation), and mesne profits (the rent that should be paid by the tenant for the period between the expiry of tenancy and the date of vacation). However, it would take some time before the landlord’s alleged grievance can be heard before a judge in court. In this waiting period, the landlord may be precluded from obtaining the contractual rent (from the tenant) or the prevailing market rent (if the landlord finds a new tenant) due to the continuous occupation of the premises by the tenant. The landlord should not be deprived of money which he would be entitled to recover from the tenant in the period leading to case being heard in court.
You must seek legal advice on any grounds for obtaining an interim payment before you make the relevant application to court.
3. Q: What is an Action for Distress?
A: Distress means the seizure, detention and sale of movable chattels/goods found in the rented property to satisfy rent arrears. Due to the nature of distress, it is mostly used in cases in which a tenant is still operating a business at the rented property. Part III of the Landlord and Tenant (Consolidation) Ordinance governs the procedures and formalities for application for distress.
The application for distress is an ex-parte application (by one party only), meaning that the tenant will not have the chance to appear before the judge to make any submission (or objection). This is to avoid the tenant knowing of the application and dissipating the available assets.
The landlord must file an affidavit/affirmation to support the application. If the Court accepts the landlord’s application, then a warrant of distress is issued. The bailiff then enters the property, seizes the movable chattels/goods found inside and in the apparent possession of the tenant, and sells the chattels/goods to satisfy the rent in arrears. As distress is complicated both in terms of procedures and legality, it is usually done with the assistance of legal professionals.