Commercial Rent Arrears Recovery

Why evict your tenant when you can exercise your right to peaceable re-entry by instructing Court Enforcement Specialists?

Did you know that by getting a possession order from a county court, this does not guarantee the return of the outstanding rent.

Commercial Rent Arrears Recovery (CRAR)

The Tribunal, Courts and Enforcement Act 2007 creates a statutory right for you, the Landlord of a LEASE of COMMERCIAL PREMISES, to utilise the enforcement procedure set out in the Act to recover RENT arrears.

You will find that until 6th April 2014, all commercial landlords had the right to claim ‘distress’ on goods within the property of a tenant in arrears.

You had the right to seize goods belonging to the tenant and either hold them until the rent was repaid, or to sell them. This was made possible via Distress for Rent Act 1737, however this change created mass confusion within the industry, but over recent years has become common knowledge.

The new process for (CRAR) Commercial Rent Arrears Recovery was outlined in Part 3 of the 2007 Act, a number of statutory instruments repealing parts of the Act have been introduced over the intervening centuries, with the Tribunals Courts and Enforcement Act 2007, which after years of deliberation was brought into force by The Taking of Goods Regulations 2013.

The new procedures are intended to be simpler and more transparent, and to redress the balance of rights between landlord and tenant.

Claiming rent from a sub-tenant

If a sub-tenant (for example, someone who rented a Manicure table in a beauty salon, or a single desk within a office) would pay rent to your immediate tenant, you may have the right to claim the rent directly from the sub-tenant.

You can find this under section 81 of the 2007 Act for further information.

Recovering Commercial Rent Arrears after the lease has ended

Commercial rent arrears recovery may only be used after the lease has ended in relation to goods taken before the tenancy ended, or if a number of certain circumstances are met.

These are as follows:

The rent was owed by whomever was the tenant when the lease ended.

The lease must not have been ended by forfeiture.

The person who was the landlord when the lease ended is entitled to the immediate reversion.

For example, the landlord would resume ownership of the property after the end of the lease.

The lease must not have ended more than six months ago.

The person still possesses some of the premises or the goods on them.

The premises or goods are occupied under a commercial lease.

The commercial rent arrears recovery process

Your tenant must be at least seven days in arrears, both at the time the notice is served and at the time the goods are seized.

Only certified enforcement agents and certain other individuals may seize and sell your tenants’ goods.

People who may act as enforcement agents are defined in the 2007 Act.

Section 7 of the 2013 Act states that the enforcement agent must give notice to your tenant as prescribed.

The commercial rent arrears recovery procedure only applies to commercial tenancies with a written lease, residential and part-residential properties are exempt from Enforcement action.

There are a number of other rules, including…

Only rent, applicable interest and VAT can be recovered, recovery of payments such as service charges is no longer allowed.

Your tenant must be given seven days notice of your intention to use the commercial rent arrears recovery procedure and in addition, certain goods are exempt from the rules and cannot be taken.

Once the goods are seized, the enforcement agent must provide your tenant with an inventory of the goods within seven days.

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