Commercial Rent Arrears Recovery - Distress Reforms To Come Into Force On 6 April 2014

Following the Ministry of Justice's response to the consultation "Transforming Bailiff Action", the law on distress will be abolished and Commercial Rent Arrears Recovery (CRAR) will come into force on 6 April 2014.

Proposals to amend the law on distress have been threatened for several years as many consider the existing process to be somewhat draconian. However, it has been a very useful tool for landlords, and perhaps due to the pressures of recession on landlords with increased numbers of defaulting tenants, implementation has been delayed. A date was set previously for implementation of the provisions contained in the Tribunals Courts and Enforcement Act, and then postponed, so there is a chance this may happen again. We must, however, be prepared for the probability that this time CRAR will come into force.

In what circumstances can CRAR be used?

CRAR will allow a landlord of commercial premises to enter its leased premises and seize goods where the following applies:-

CRAR can only be used in respect of "pure" commercial rent arrears cases i.e. principal rent, VAT and interest. It excludes sums which may be reserved as rent in the lease such as service charge and insurance; The lease must be evidenced in writing; There must be rent arrears of 7 or more days; CRAR cannot be used in relation to mixed-use premises, e.g. where the lease comprises retail premises with a flat above used as a dwelling. The premises must be purely commercial in nature. The only exception to this is if the occupation of the flat as a dwelling is in breach of the terms of the lease. It should be noted that a way of preserving the CRAR remedy is to let such premises on separate residential and commercial leases. What is the procedure for engaging the CRAR process?

Step One

The process is initiated by the landlord serving an enforcement notice (containing specified information) on the defaulting tenant using an "enforcement agent". At least 7 clear days' notice (excluding Sundays and bank holidays) must be given to the tenant. If it is "likely" that goods will be removed or disposed of in order to avoid recovery, the Court has the power to reduce the notice period to a period of less than 7 days.

Step Two

Once the notice period has expired, agents can enter the premises and remove goods. Goods may be removed between 6am and 9pm on any day of the week. If the business does not operate within these hours, the agents may enter the premises when the business is...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT