If a tenant fails to pay rent, then the following measures are usually available to the landlord.
a) Action for the recovery of 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 followings.
- The Small Claims Tribunal: for claims of $75,000 or less (To get more information about how to prepare for the trial (from both the Claimant's and the Defendant's perspective), please click here;
- The District Court: for claims that exceed $75,000 but do not exceed $3,000,000;
- The Court of First Instance of the High Court, which has unlimited jurisdiction.
Landlords of domestic properties domestic property, should ensure that they have submitted a Notice of New Letting or Renewal Agreement (Form CR109) to the Commissioner of Rating and Valuation for endorsement within one 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 one month period can do so at any time after paying a fee of $310.
b) Action for forfeiture (to get back the property) and to recover outstanding rent
In the case of serious default on payment of rent or in the event that landlords believe that their tenants have been 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 $3,000,000 and the rateable value of the property does not exceed $320,000; or
- the Court of First Instance of the High Court for outstanding rent of any amount.
The landlord, if successful 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 the Writ of Possession, the court bailiff will recover the possession of the property on the landlord’s behalf.
Jurisdiction of the High Court
It should be noted that although the High Court has unlimited jurisdiction to handle any of the above claims, it normally will not entertain a claim that falls within the jurisdiction of the District Court or the Lands Tribunal.
Application for Summary Judgment for possession/Interim payment
After commencement of proceedings, it may take some time to wait for trial to take place at Court (especially for the District Court/Court of First Instance). However, for many cases, there may be procedure for landlords to recover possession/rent in a more speedy fashion known as “summary judgment” or “interim payment” if the landlord is satisfied that there is no arguable defence on the part of the tenant to resist an application for an order of repossession and/or payment of outstanding rent.
You must seek legal advice on any grounds for obtaining a summary judgment or an interim payment before you make the relevant application to court.
c) Action for distress
Distress means the seizure, detention and sale of movable chattels/goods found in the rented property to satisfy the rent arrears pursuant to a warrant issued by the District Court upon application by the landlord. 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 applications for distress.
The application for distress is an ex-parte application (by one party only) to the District Court, 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 in a prescribed form. 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.
Note that the bailiff cannot seize land fixtures (e.g. air-conditioning machines and, some built-in appliances), things in use, tools and implements or the goods which is apparently owned by parties other than the tenant. The goods as seized will be impounded by the bailiff until the rent is paid or being sold by an auctioneer as the Court may direct.
As distress is complicated both in terms of procedures and legality, it is usually done with the assistance of legal professionals.