Tenant Insolvency: Distress vs. Termination

Absent a stay of proceedings, the landlord retains the right to distrain against the goods on the premises or terminate the lease. These options are mutually exclusive, and irrevocable. The right of distress, under the Rent Distress Act, requires a commercial tenancy. Therefore, if a landlord has terminated the lease, he has ended the tenancy. He cannot then distrain against the assets on the premises. Once the landlord has distrained, he cannot terminate the lease without abandoning the distress and releasing the property seized.

If the landlord elects to terminate the lease and re-enter the premises, it must ensure that the lease allows for him to terminate the lease for the breach cited. Termination of the lease by the landlord may act to release the guarantors from their liability for future rent. Also, if a landlord has terminated the lease he can then not accept a payment on account of current rent.

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