Commercial rent arrears remain a significant issue for commercial landlords across the UK. While going to court to recover this may seem like the only option, you can avoid going to court with the CRAR (commercial rent arrears recovery) procedure.
CRAR was brought into law in 2014 and essentially means that overdue rent from a lease can be recovered from a tenant without the need to go to court. It’s important to note that it can only be used for rent (and applicable interest and VAT) and cannot be used for elements relating to the use of the property such as service charges. A written lease must also be in place for this type of enforcement to be undertaken.
The CRAR process works like this:
- To use the commercial rent arrears recovery procedure, the landlord must give the tenant 7 days’ notice of enforcement. The Notice of Enforcement MUST be prepared and sent from the Enforcement Officer.
- The written notice must be served by post, fax, hand or by electronic communication such as email.
- At the time of the notice being served, the rent must still be unpaid. This remains the case up to the point when any goods are seized.
- Tenants may apply for the court to set aside or delay the execution of the notice.
- Only Certificated Enforcement Agents are permitted to attend the property and seize goods
- They can enter through the commercial premises via an open or unlocked door between the hours of 06:00 and 21:00 (or during normal business hours for the tenant).
- Goods owned by the tenant and occupying the commercial premises are the only items that can be seized to cover the overdue money plus the costs of recovery. A valuation of the items seized must be given to the tenant.
- For sole traders, the “tools of the trade” will be exempt up to the value of £1,350.
- If seized items to go public auction, the tenant must be given 7 days’ notice of the sale.
- The net sales proceeds are offset against the amount of rent owed.
Once the 7 day enforcement notice has been issued, tenant and landlord can enter a repayment plan to recover the rent without having to remove goods or go to court. Your Certificated Enforcement Officer should be able to negotiate a sensible repayment plan on your behalf, so you can continue having a paying tenant rather than an empty commercial premise.
CRAR to recover rent
Utilising CRAR is a viable option for commercial landlords hoping to avoid taking tenants to court. However, if you follow this path and the value of the rent isn’t recovered for whatever reason, you can cancel the CRAR process and begin procedures to forfeit the lease. It’s worth noting that you cannot execute both procedures at the same time, so you’ll have to cancel one before undertaking the other.
If you think that the goods within the commercial property won’t match the amount of money owed, it may be quicker for you to forfeit the lease straight away.
Writ of Control
Finally, if other avenues fail, you can apply through the courts for a Writ of Control. This is useful for helping you recover money beyond rent (i.e. service charges) or if the tenant has relocated their business. This will take longer and so it’s the option of last resort in many cases.
For advice or assistance in recovering rent, please get in touch with Able Investigations. We have years of experience with CRAR and rent recovery and will ensure you get monies owed quickly and professionally. You can call us on 0345 366 0000, email us or use our contact form.