Helpless landlords

ARTICLES OF LAW

By BHAG SINGH

 

 

Although there are provisions to allow landlords to recover overdue rental, there are limitations, too.

 

NOT everybody can afford to purchase a property to live in or to operate a business. Hence renting becomes a viable option for many. Renting involves the creation of a relationship between the landlord and the tenant. This may be created formally or informally, whether or not in writing.

 

The essence of the relationship is that for the agreed term, the tenant is entitled to enjoy the said possession. The landlord in return gets the rent.

 

If the tenant fails in his primary obligation, there will be cause for concern. If the tenant moves out, at least the landlord can mitigate his loss by renting it out to someone else. But the tenant may choose to stay, yet not pay rent.

 

Many a landlord in such a situation will feel frustrated. Going to the courts can be time-consuming and costly. Would it not be easier to just go in and chase the tenant out? Or could one not just disconnect the electricity and water supply?

 

Remedies

 

A landlord has three distinct remedies against a tenant in arrears with his rent. He may levy distress upon the tenant's goods, which ultimately he may sell to pay off such arrears as remain unpaid.

 

Apart from that, he may sue the tenant on the covenant to pay rent, or he may seek to terminate the tenancy through forfeiture.

 

In addition, for any period for which he cannot claim rent, the landlord can get the liquidated damages, which would include claims for compensation for use and occupation, or an action for mesne profits.

 

Once the relationship of landlord and tenant has been created, the rights and obligations of the parties inter se will be governed by its terms subject to the general law. As the arrangement is a contract, its terms are enforceable between the parties in much the same way as any contract.

 

One of the rights conferred on the tenant is the landlord's covenant that "the tenant paying the rent hereby reserved and performing and observing the several covenants on his part herein contained shall peaceably hold and enjoy the demised premises during the said term without any interruption by the landlord or any person rightfully claiming under or in trust for him."

 

Distress

 

The right to distrain is an ancient remedy which may be described as the right to take another's goods without legal process as a pledge for the satisfaction of a debt or claim. It is a remedy not confined to the law of landlord and tenant.

 

The Distress Act 1951 provides for this. It involves the application for a Warrant of Distress addressed to the bailiff directing the latter to forthwith distrain any removable property found by him on the premises named in the distress warrant.

 

The plus side of a warrant of distress is that it is obtained ex parte, meaning that the application to the court does not have to be served on the tenant before an order is made. The tenant will only know when the bailiff turns up at the premises to seize the property.

 

However, it must be noted that the purpose is primarily for the landlord to recover rent and not to get back possession of the premises. Once the goods have been seized and disposed of, the tenancy, unless terminated, continues.

 

Distress is not for recovery of possession. However, possession may be obtained where the premises are abandoned and there is no sufficient property seized with which the arrears can be paid. If so, an application can be made to authorise the bailiff to enter the premises and take possession.

 

Even then, the bailiff must in such cases affix in a conspicuous place or on the premises, a notice that possession thereof will be delivered to the landlord, unless within 10 days a judge, on the application of any person interested, otherwise orders.

 

Forfeiture and re-entry

 

There are instances where the landlord may seek to terminate the tenancy by forfeiture in exercise of a right to re-enter reserved expressly under the tenancy in the case of non-payment of rent. This could read as follows:

 

"If the rents hereby reserved ... shall be unpaid for (twenty-one) days after becoming payable it ... shall be lawful for the landlord at any time thereafter to re-enter upon the demised premises or any part thereof in the name of the whole."

 

Of course, such a covenant may be enlarged in its scope to allow similar action to be taken in case of other breaches. Whilst this is an option on paper, the landlord's right could be frustrated by other matters.

 

Where an effort to re-enter the premises is physically resisted, this could have a potential to cause a breach of the peace. In such a case, Section 99 of the Civil Procedure Code comes into play. A magistrate can act, if satisfied from a police report that a dispute is likely to cause a breach of the peace.

 

He can order the parties concerned to attend before him and put in written statements their respective claims with regard to possession of the premises in dispute.

 

He can thus make an assessment on which party should remain in possession. If the magistrate decides that one of the parties is in actual possession, an order declaring such party to be entitled to retain possession until evicted in due course of law, can be made.

 

Conclusion

 

Even where the tenant does not resist the re-entry because he is not present or otherwise, it would be prudent to make an inventory on what is found. Being accompanied by an independent party could be helpful against future claims by the tenant that some valuable property has gone missing.

 

There is, of course, the other aspect of cutting off electricity and water supply to the premises. Whether one is entitled to do so will depend not only on practical considerations but also on how the tenancy agreement is worded as well as the stage and point of time at which such action is taken.

 

Apart from the contract terms, one may also need to consider whether incorporation of such provisions permitting discontinuation of a utility is enforceable as it is contrary to public policy. This aspect could be the subject of a separate discussion.