Commercial Lease - What If Tenant Doesn’t Pay Their Rent? (SA)

Commercial Lease – What If Tenants Don’t Pay Their Rent? (SA)

You own a property that you lease to a business under a commercial lease, but the tenant’s rent payments have been late and now they’re in arrears. What should you do? If you’re a landlord in South Australia, one avenue to pursue is your right to distrain.

Your property law and commercial lease rights

The right to distrain is set out in the Landlords and Tenants Act 1936 (SA). It allows you to enter your premises, seize the goods sold on them and sell them to recover the rent that is owed. To do this, you need to first establish that you have the right to distrain. It’s important to not take any action to terminate the commercial lease, as this would mean that you have no right to distrain.

The process to distrain

You, or your lawyer, need to search the Personal Property Securities Register (PPSR) before pursuing your right to distrain. You need to check that any potential distrained goods are not on the register before you try selling them.

Once you’ve established you have a right to distrain and the goods are not on the PPSR, you can issue a Warrant for Distraint. You or an authorised agent may initiate distraint between 6am and 6pm. Bailiffs are usually used to seize the goods.

The bailiffs should make a complete inventory of all the goods, and this should be given to the immediate tenant. If no one is on the property to receive the inventory, it should be displayed clearly on the premises and a copy should be sent to the tenant’s address.

Any goods distrained need to be held for five days. This five-day window gives the tenant time to pay their rent and anyone with interest in the goods time to make their claim. Following this period, you can sell the goods at an auction held by a licensed auctioneer. Once the cost of the sale and the rent has been paid, the remaining sum has to be given back to the tenant.

Legal advice on your commercial lease

If you need to understand and enforce your rights as a commercial landlord under South Australian law, consult a property lawyer.

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