Seizure can be distressing!

Many businesspeople are either landlords or tenants. Some tenants have problems paying the lease and sometimes the landlord has to take action.  What does a landlord do?

First, consult the lease.  Whatever the law allows you to do may be limited by whatever is in the lease.

Second, decide what you want to do.  You have two options: terminate the lease for non-payment or allow the lease to continue and use another remedy.  

If you terminate the lease, you typically enter the premises and change the locks.  You often have to allow the tenant to remove their goods and fixtures.  While it may seem unfair that you have to allow the tenant to take their inventory from your control, you have terminated the lease and you no longer have any right to seize that inventory to satisfy the rent arrears.

A termination can be very effective.  Often, the tenant offers to pay the arrears and asks that the lease be reinstated.  There is little worse for business than to have customers come to the door and see that the tenant was locked out for non-payment of rent.  The timing can be used as a tool too.  I once terminated a mortgage broker on the morning of the last Friday of the month.  There were a lot of real estate deals held up and this prompted very fast action.

If you do not terminate the lease, you can effect a "distress".  This is when you take control of goods and fixtures belonging to the tenant, with the purpose of selling them to satisfy the rent arrears. CAUTION: this is an especially risky procedure.  Hire a professional bailiff.

In a typical distress, the bailiff will either seize or label the goods of the tenant.  The tenant has a period of time in which to pay the arrears and the bailiff?s fees, or the goods can be sold. The goods will be appraised, and sold in a commercially reasonable manner, often by auction.

It is important to realise that all the goods and inventory may not all belong to the tenant.  Goods held on consignment or subject to other security may be of no value to you at all.

The effective aspect of a distress is that a business now has had their inventory and equipment cleared out and can no longer function.  This can be the catalyst that gets the landlord paid.

The consequences of a landlord terminating or effecting a distress improperly are severe.  Do not take any chances.  Consult your lawyer and make sure that all the necessary steps have been followed. You could end up paying a lot a damages if you seize or terminate improperly, even though the tenant may be in arrears!