Distress for rent and privileged goods
by Peter Watt on 23 August 2011
Under the common law remedy of distress for rent, a commercial landlord may distrain (seize) goods present at the premises and either hold them until the commercial rent arrears are paid or sell them to offset the arrears. The landlord will normally use a certificated bailiff to distrain on his behalf as his agent. The landlord may only distrain when there is a lease in place and the rent is in arrears under the terms of the lease.
The basic common law allows for any item on the premises to be taken to cover the debt. However, some goods have been exempted by statute, the exemption also known as privilege.
There are items with absolute privilege, which may not be seized under any circumstances. There are items with qualified privilege which only be taken if there are not enough other goods available to cover the debt. Finally, there are specific items that carry no privilege.
Absolute privilege
These items are completely exempt from seizure:
- Perishable items
- Things in actual use (including clothes being worn)
- Household goods
- Tools of the trade
- Goods held on commercial premises as a direct part of the tenant’s business, for example items left for repair, goods held on sale or return
- Goods on hire purchase
- Hired and leased items, as they belong to a third party
- A third party’s goods, e.g. sub tenants’ and other unconnected third parties’ goods
Qualified privilege
The landlord may remove qualified items if he has not reached the necessary value after seizing all other goods and it appears that there is nothing else available for seizure at the property. The landlord must genuinely believe there was nothing else available, as he could be sued otherwise.
Qualified privilege mainly concerns tools of the trade, in excess of those already protected by absolute privilege.
No privilege
Some goods are specifically excluded from protection:
- Goods belonging to the tenant’s spouse or partner
- Goods lent to the tenant on permanent load with no conditions attached
- Goods belonging to the tenant’s business partner
- Goods in the possession in any bill of sale or hire purchase agreement (except those subject to a default notice served in the Consumer Credit Act 1974)
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