One of the most frustrating things for any landlord is dealing with tenants who persistently default in paying rent when it becomes due. Non-payment or late payment of rent amounts to a breach of contract and the law grants a landlord the right to claim and recover any rent amount that is in arrears. The law provides the following legal remedies a landlord may pursue to recover unpaid rent:
Payment of Penalties in the Agreement
Most lease, tenancy and license agreements will include a provision requiring a tenant to pay penalties in form of interest in cases of late payment of rent. Some agreements will also provide for the disconnection of utilities such as water and electricity if rent or utilities are not paid by the due date. So as not to be caught off guard, it is prudent for a tenant to read and understand all the provisions of an agreement before execution so as to be aware of any penalties they have to comply with.
Issuance of a Demand Letter
Once there is an accrual of rent, a landlord may issue a demand letter to the tenant requesting payment of the rent arrears within a specified period of time. The letter acts as a reminder to the tenant and should include the amount of rent owed, the date it fell due, the specified period the tenant is required to pay the amount and a warning that failure to comply with the letter, the landlord reserves the option to pursue other legal remedies like instituting legal proceedings.
Distress for Rent
One of the most effective ways a landlord may use to recover rent that is in arrears is distressing for rent. Distress for rent is the process where a landlord seizes or causes goods to be seized from a tenant who is in rent arrears for one month, with an aim of selling the goods to recover the unpaid rent. The process is governed by the Distress for Rent Act, Cap 293 Laws of Kenya and the Auctioneer Act, Cap 526 Laws of Kenya and must be strict compliance of the said Acts. This remedy is best exercised by an auctioneer duly certified and licensed by the Auctioneers Licensing Board of Kenya.
Section 16 of the Distress for Rent Act prohibits the landlord from seizing certain goods from the tenant’s premises like tools of trade, perishable goods, wearing apparel and beddings, government property, pets and goods that belong to third parties. Further, the process should not be undertaken at night and on Sundays. Once the goods are seized, the tenant should within 14 days pay the accrued rent and the auctioneer’s fees. Failure to, the landlord has the right to auction the goods and recover the rent owed.
It should be noted that this remedy is exercisable in grants, leases or tenancies including controlled tenancies. In John Nthumbi Kamwithi vs. Asha Akumu Juma (2018) eKLR the High Court while setting aside the Principal Magistrate’s decision in its entirety held that:
“35. I find that the appellant had no obligation to seek permission from the tribunal to levy distress. The fact that the tenancy is controlled does not mean that the landlord applies to the tribunal to levy distress. Distress is a right the landlord is entitled to for recovery of rent. If the tenant chooses, he/she could file a reference to the tribunal for orders in objection of the distress…”
Termination of the Agreement
- Forfeiture of Lease
Section 73 of the Land Act, 2012 grants a lessor the right to forfeit a lease by taking back possession of the premises let out, if the lessee commits any breach or omits to perform any condition expressed or implied in the lease, the lessee is adjudicated bankrupt or if it is a company goes into liquidation.
The Act provides that the process of forfeiture commences by the lessor issuing a notice of not less than thirty (30) days specifying the breach complained of and requiring the lessee to remedy the breach within a specified period of time. This remedy is useful and effective in cases of a persistent rent defaulter and the landlord does not desire to maintain the relationship with the tenant.
- Controlled tenancy
Section 4 of the Landlord and Tenant (Shops, Hotels and Catering Establishments) act, Cap 301 provides that a landlord who wishes to terminate a commercial premise that is a controlled tenancy, must issue a termination notice of not less than 2 months in the prescribed form; specifying the ground(s) of termination(in this case is the default in payment of rent or persistent delay in paying rent when it becomes due) and requiring the tenant within 1 month after receipt of the termination notice to confirm in writing whether he/she agrees or disagrees to comply with the notice.
Upon receipt of the termination notice by the tenant, the following may occur:
- The tenant agrees with the notice and pays the accrued rent within an agreed period of time;
- The tenant opposes the notice and refers the matter to the Business Premises Rent Tribunal. The notice ceases to have effect until the ruling and determination by the Tribunal; and
- The tenant does not oppose the notice or refer the dispute to the Tribunal. After the lapse of the 2 months, the termination notice takes effect and the landlord-tenant relationship ceases. At this point, should the landlord desire to evict the tenant, they may do so by obtaining eviction orders from a Magistrate’s Court.
In conclusion, a landlord should not forcefully and unlawfully evict a tenant without justifiable cause or unjustifiably increase rent or cut off utilities to the premises. This amounts to an abuse of power and will expose a landlord to litigation. As a tenant remember communication is key. Try and negotiate for a rent reduction that will be suitable for you before binding yourself to an agreement with the landlord. Further, when financial circumstances make it hard for you to pay rent in time, communicate the same with your landlord in advance.
Written by Cynthia Kitolo
Legal Officer & Advocate of the High Court of Kenya