Recovering rent arrears within the law is crucial
On 6 April 2014, the old landlord’s right of distress against his tenant was abolished and has been replaced by Commercial Rent Arrears Recovery (CRAR).
CRAR is a complex process in which a landlord must now serve a notice on his tenant before any goods can be taken. The other changes include the fact that there is now a minimum amount of arrears that must be outstanding before CRAR can be exercised. This minimum rent or ‘ned unpaid rent’ is equal to 7 days rent.
CRAR only applies to the principal rent, VAT and interest and does not apply to service charges, insurance premiums of other sums which are reserved as rent. In respect of recovering these other sums, a landlord must consider other forms of recovery such as obtaining judgment in the county court.
CRAR cannot be used if the property is mixed use, it can only be used if the premises is solely commercial.
With regard to the notice that must be given to the tenants, 7 clear days notice is required before any action can be taken. This removes the element of surprise that distress allowed the landlord and gives the tenant the opportunity to possibly remove some goods.
The tenant does have a right of appeal to apply to the court seeking an order that no further steps may be taken under CRAR without further notice of the court in relation to the amount claimed.
Hanne & Co has experience in recovering commercial rent arrears as well as service charges and other sums due under the terms of a lease. Please contact Victoria Copeland of our Property Disputes Department if you need help.