If you are a commercial landlord, then you may have some knowledge of executing a distraint to collect rent owed to you.
If you are owed rent monies, then you have the right (unless it’s been removed in the lease) to take the chattels of your tenant and sell them, with the net proceeds of the sale applied to the rents that you are owed.
Some leases even dictate that certain non-monetary breaches of the lease will trigger a right to collect accelerated rent, thus bringing the right to distrain into play.
Often, a landlord uses a distraint to scare or embarrass the tenant into payment, as the presence of a bailiff in the premises taking an inventory of all of the furniture, computers and artwork on the walls (and taking pictures of it all) does not convey a positive image to employees and clients of the tenant. Many times, payment flows after to the bailiff for the full amount of the rents owing along with the bailiff’s costs of the distraint.
Distraints can, however, be fraught with danger if used unwisely or if done improperly. Illegal or irregular distraints can give a tenant a cause of action against the landlord for damages. Those damages can be very significant if the landlord improperly seizes and sells the chattels of the tenant, which could cause the entire business operations of the tenant to collapse. A common example is an excessive distraint – that is, where more chattels were seized than was necessary to satisfy the arrears.
A distraint cannot be used after a landlord has terminated the lease and locked out a tenant. However, landlords without an understanding of commercial tenancy law often attempt to do so regardless, realizing too late that the chattels had value or attempting illegally to coerce payment from the tenant by refusing to allow the chattels to be removed.
There is also recent caselaw from the BC Court of Appeal that suggests using a distraint to collect accelerated rent will require the landlord to wait out the accelerated rent months before it can abandon the distraint and instead proceed with a termination of the lease. That could cost a landlord tens or hundreds of thousands of dollars in lost rent while waiting for those accelerated rent months to pass.
Our office utilizes a bailiff who has decades of experience, which compliments well with our similar years of experience in this area of law. An experienced counsel and bailiff are essential to properly and effectively exercising a distraint remedy.
Paul H. Voorn LLB