Writ of Distress in Malaysia: How Factory and Warehouse Landlords Recover Unpaid Rent

Key Takeaways

• A writ of distress (in Malaysian law, a warrant of distress under the Distress Act 1951 (Act 255)) lets a landlord recover unpaid rent by having a court bailiff seize and sell the tenant's movable property on the rented premises.
• The landlord must apply to the court first. Section 4 says no landlord may distrain for rent except in the manner the Act provides, so locking the shutter or taking the tenant's machines yourself is not allowed.
• The claim is capped at rent for up to twelve completed months before the application (section 5), and it can still be made after the tenancy ends if the tenant or the tenant's goods are still on the premises.
• After seizure the tenant gets a notice with an inventory and valuation; the sale cannot be held less than six days from the notice, and the tenant can stop it by paying within five days or getting a court order (section 9).
• Distress recovers rent; it does not by itself give the landlord the factory back. Getting vacant possession from a tenant who stays on is a separate court proceeding under section 7(2) of the Specific Relief Act 1950.

This guide explains the law in plain terms for factory and warehouse owners and tenants. It is general information, not legal advice; speak to a lawyer before you file or respond to a distress application.

What is a writ of distress in Malaysia?

"Writ of distress" is the everyday name for the warrant of distress issued under the Distress Act 1951. In Malay it is usually called waran distres, and the Act itself is the Akta Distres 1951. It is a remedy for one thing only: rent that a tenant owes under a lease, sub-lease or tenancy agreement.

Under section 7, the warrant is addressed to the court bailiff and directs the bailiff to seize movable property found on the premises named in the warrant, enough of it to cover, when sold, the rent stated to be due plus the landlord's costs and the bailiff's fees and expenses. The landlord does not seize anything personally.

Two points often surprise owners of industrial property:

• The Act does not apply to rents due to the Federal or a State Government (section 3), so it is a tool for private landlords.
• Where a factory is owned jointly, any one of the co-owners may apply in their own name and the names of the others, although the court can ask for written authority from the other owners (section 6).

When can a factory landlord apply for a warrant of distress?

The conditions in section 5

• Who applies: the landlord, or an agent authorised in writing. A power of attorney is accepted as that authority, and it must be produced at the application.
• How: the application is made ex parte (without the tenant being heard first) to a Judge or Registrar.
• How much: rent due for a period not exceeding twelve completed months of the tenancy immediately before the date of the application. Older arrears have to be pursued in an ordinary civil claim.
• After the tenancy has ended: arrears can still be distrained for, provided the tenant is still occupying the premises or any of the tenant's goods are still there.

Which court hears it?

Under section 65(1)(a) of the Subordinate Courts Act 1948, the Sessions Court has unlimited jurisdiction over civil actions on landlord and tenant matters and distress. A First Class Magistrate hears civil matters where the amount in dispute does not exceed RM100,000 (section 90). For a factory in Klang or Shah Alam, that means the Sessions or Magistrates' Court in the district, not necessarily the High Court. Your lawyer will choose the right court and form.

Have the tenancy agreement stamped first

The court will look at your tenancy agreement as evidence of the rent. Under section 52 of the Stamp Act 1949, an instrument chargeable with duty that is not duly stamped cannot be admitted in evidence until the duty and any penalty are paid. Check the duty with the tenancy stamp duty calculator and stamp it on MyTax as explained in our duti setem LHDN online guide.

What happens step by step?

Costs of the proceedings are at the judge's discretion and may be added to the amount recoverable under the warrant (section 18). The Act does not fix a ringgit amount for bailiff fees; the court and your lawyer will tell you what applies to your case.

What can the bailiff seize in a factory or warehouse?

This is where an industrial tenancy differs most from a house or shop. Section 8 excludes several kinds of property, and some of them describe exactly what fills a working factory:

• Things in actual use in someone's hands at the time of seizure.
• Tools and implements not in use, where other movable property on the premises is enough to cover the amount and costs.
• Goods held for trade: goods in the tenant's possession for the purpose of being carried, wrought, worked up or otherwise dealt with in the ordinary course of business. For a contract manufacturer processing a customer's materials, or a logistics operator holding cargo for clients, much of the stock on the floor may not be the tenant's to lose.
• Goods in the custody of the law, and government or local authority property.

Goods that belong to someone else

An under-tenant, a lodger or another person whose goods were seized for the main tenant's arrears can apply to discharge or suspend the warrant or release the goods (section 10). That route has limits that matter in industrial premises. Under section 12 it does not apply to goods under a hire purchase agreement in the tenant's possession, to goods of the tenant's partner, to goods on premises where both the tenant and the under-tenant run a business they share an interest in, or to goods of a company in offices where the tenant is a director, officer or employee of that company. It also does not apply to goods on premises used as offices or warehouses where the owner of the goods fails, for one calendar month after a notice given like a notice to quit, to remove them and vacate. And an under-tenant whose sub-tenancy breached a written covenant with the landlord cannot use it at all (section 13).

Sub-let factories

If your tenant has sub-let part of the factory and stopped paying you, section 14 lets you serve the sub-tenant, by registered post to the premises, a notice requiring future rent to be paid directly to you until the arrears are cleared.

What can a factory tenant do?

• Pay within five days of the notice of seizure to stop the sale (section 9).
• Apply to court to discharge or suspend the warrant, or to release part of the property (section 16). The judge can dismiss the application, discharge the warrant, release goods on terms, order a trial of an issue, or order a sale with the proceeds held in court (section 17).
• Do not move machines or stock out to dodge the bailiff. Under section 21 a judge can authorise the bailiff to follow and seize goods removed to hinder distraint within thirty days of the removal, wherever they are found. A buyer who paid fair value in good faith is protected and can apply within four days of seizure (section 22).

Can a landlord lock the factory or cut the power instead?

No. Section 4 of the Distress Act rules out distress outside the Act, and section 7(2) of the Specific Relief Act 1950 says that when a tenancy has ended but the occupier stays on, the owner may not recover the property "otherwise than by proceedings in the court". Changing the padlock on the roller shutter, cutting the TNB supply or carting machines away yourself exposes the landlord to claims from the tenant and can undo an otherwise strong case. Anyone who sells or helps sell seized property in breach of the Act faces a fine of up to RM500 or up to three months' jail (section 24).

Distress or possession: which do you need?

A lawyer can advise whether to pursue the rent and the possession claims at the same time.

What if the tenant has abandoned the factory?

Section 23 covers deserted premises. Where the rent is at least three quarters of the annual value, rent is at least two months in arrears, and the tenant has abandoned possession leaving too little property to recover the arrears, a judge can authorise the bailiff to enter, by force if needed, and post a notice that possession will be handed to the landlord unless a judge orders otherwise within ten days. If nobody applies within those ten days, the landlord is put in possession and the tenancy is treated as ended.

How do factory landlords avoid needing a writ of distress?

• Check the tenant company and its directors before signing, and consider a personal guarantee from the directors for a single-purpose company.
• Write clear rent due dates, late payment interest and a default clause into the agreement, and stamp it on time.
• Watch arrears monthly. The twelve-month cap in section 5 means waiting too long can cost you rent you could have distrained for.
• Keep records of who owns what on site (sub-tenants, customer goods, leased machinery), because section 8 and section 10 claims will turn on them.
• Factor arrears risk into your numbers when you work out net rental yield on a factory.

Frequently Asked Questions

What is a writ of distress in Malaysia?

It is a court warrant under the Distress Act 1951 that lets a landlord recover unpaid rent. The court bailiff, not the landlord, seizes the tenant's movable property on the rented premises and sells it to pay the rent, costs and bailiff's fees. It applies to factories and warehouses as much as to homes and shops.

What is writ of distress in Malay?

It is usually called waran distres, issued under the Akta Distres 1951. Malay court documents and lawyers' letters use that term.

How many months of rent can a landlord claim through distress?

Up to twelve completed months of the tenancy immediately before the application, under section 5(1) of the Distress Act 1951. Rent older than that has to be claimed through an ordinary civil suit.

How many months is given to a tenant to vacate?

No law sets one fixed period for business premises; it depends on the notice period in the tenancy agreement. For a periodic tenancy with rent unpaid for at least fourteen days, section 25 of the Distress Act allows a notice to quit to expire on the day it names, unless the parties agreed otherwise. If the tenant still stays on, the landlord must go to court for possession.

Can a landlord seize a tenant's machinery or customers' goods?

Things in actual use in someone's hands at the time of seizure, and goods held for the purpose of being carried, worked up or otherwise dealt with in the tenant's ordinary trade, are excluded by section 8. Tools not in use can be seized only if there is not enough other property. Whether a particular machine or pallet is covered depends on the facts, and the tenant can ask the court to release it under section 16.

Is a writ of distress the same as a writ of seizure and sale?

No. A writ of seizure and sale enforces a court judgment for any debt after the case is decided. A warrant of distress is a specific landlord's remedy for rent that is applied for directly under the Distress Act 1951, without first suing for a judgment on the rent.

Can the landlord cut electricity or lock a factory tenant out?

No. Section 4 of the Distress Act allows distress only through the court, and section 7(2) of the Specific Relief Act 1950 requires court proceedings to recover property from an occupier after a tenancy ends.

Talk to us

If you are letting a factory or warehouse in Klang or Selangor and want help finding a tenant you can rely on, or you are a tenant looking for a better fit, see our industrial property agents in Klang. FactoryHub is dedicated to helping every client find the right factory or warehouse. Call or WhatsApp Peter Tan (REN 12771) at 016-666 6872.