Home Business Bill bars auction of rent defaulters without court nod

Bill bars auction of rent defaulters without court nod


Economy

Bill bars auction of rent defaulters without court nod


case3
BDgeneric_logo

Summary

  • The government-backed Landlord and Tenant Bill of 2021 requires landlords to file a case at the Rent Tribunal and get ruling ahead of auction.
  • This is a departure from the current Distress for Rent Act that empowers landlords to auction rent defaulters after issuing a 14-day notice.

Landlords will be barred from auctioning the property of rent defaulters without court approval if Parliament adopts a proposed law that seeks to protect tenants from arbitrary forced assets sale.

The government-backed Landlord and Tenant Bill of 2021 requires landlords to file a case at the Rent Tribunal and get ruling ahead of auction.

This is a departure from the current Distress for Rent Act that empowers landlords to auction rent defaulters after issuing a 14-day notice.

Auctioneers warn that the proposed law could embolden rent defaulters and encourage tenants to cart away household goods as the case drags at the Rent Tribunal.

“No landlord shall, without legal process, seize a tenant’s property for default in the payment of rent or for the breach of any other obligation of the tenant,” the Bill says.

Landlords have been relying on the Distress for Rent Act that allows property owners to seize assets of rent defaulters with the aim of selling to recover leasing arrears.

But the assets seizure must be done by an entity licensed by the Auctioneers Licensing Board of Kenya.

The new legislation is expected to repeal all laws relating to renting, including the Distress for Rent Act, Rent Restriction Act, and the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act.

It establishes a tribunal, which will have the power to determine the recovery or possession for payment of rent arrears.

The tribunal shall determine cases within three months from the date the dispute is lodged.

Currently, the Business Premises Rent Tribunal (BPRT) and the Rent Restriction Tribunal (RRT) handle disputes between landlords and tenants — shops, hotels and catering establishments.

STABILITY OF RENTS

The tribunals facilitate stability of rents and prevents tenants from exploitation by landlords while guaranteeing reasonable returns to the property owners.

The current tribunals were established by the Cabinet Secretary. With the new Bill, the tribunals are to be established by the Chief Justice, who determines their jurisdiction. This is set to ease the delays in delivery of justice and reduce case backlog.

Landlords claim that current tribunals have been taking more than a year to conclude cases and that they have no assurance that the new tribunal will give determination within three months.

They fear tenants will take advantage of the protection to extend stay and even exit the premises before a ruling is made and avoid auction.

“When my tenants default I cannot do anything until I pay a prescribed fee, the matter goes to the tribunal, I take the summons to him, he files his defence and we have this back and forth while he is living in the house,” James Josiah of Nyaluoyo Auctioneers said.

Landlords and tenants who fail to comply with rulings of the tribunal face a fine of Sh200,000 or one year in jail or both.

Kenya has witnessed a build-up of rent disputes at the tribunals in the wake of the Covid-19 economic fallout, which triggered layoffs and business closures.

The State of the Judiciary report for 2020 shows that 2,261 cases were filed out of which 1,627 had been resolved at the business premises tribunal.

The report shows that a further 2,306 cases were filed at the Rent Restriction Tribunal where only 593 had been resolved.

The new law comes at a time where there have been reports of brutal evictions and auction of property for non-payment of rent. There have been calls on landowners to waive rent due to the reduced activity in efforts to tame the pandemic.

Businesses and individuals hit by the economic fallout of the pandemic have delayed on rent, with some having their properties sized and sold off.

Major rental disputes to have played out in public recently include that involving retail chain Tuskys Supermarkets, which sued some of its landlords seeking to have property taken from its stores for auction returned.



Source link