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UNDERSTANDING COMMERCIAL RENT ARREARS RECOVERY

Home / News & Opportunities / Member News

Date: 31/10/2016

Commercial Rent Arrears Recovery (CRAR) came into force in April 2014 (seven years after the Act which set out the proposed new scheme) and replaced the ancient Common Law Remedy of Distress.

“Distress” enabled the landlord or his agent or commercial bailiffs to enter into the leased commercial premises and remove the tenant’s goods to the value of unpaid rent. 
 
The new scheme, CRAR, only applies where the premises are let and used exclusively for commercial (not residential) purposes.  It can only be done by instructing an authorised enforcement agent and can only be used to enforce rent arrears, not service charges or insurance premiums or other payments under the lease.  There must be at least 7 days rent in arrears.  The landlord has to instruct the enforcement agent in writing. 
 
An important difference between distress and CRAR is the requirement under CRAR for the enforcement agent to give the tenant at least 7 clear days notice in writing before entering the premises.  The old remedy of distress could be exercised without any notice, thereby reducing the opportunity for an unscrupulous tenant to remove goods of value from the premises to stop the enforcement agent taking them.  He can only enter the premises on any day of the week between 6.00am and 9.00pm unless the premises were open for the purposes of the tenants business outside those hours in which case he can go in during business hours. 
 
The enforcement agent has the general power to use reasonable force to enter the premises but only by a door or usual entry point – i.e. not window.
 
An enforcement agent can enter into a controlled goods agreement with the tenant.  This enables the tenant to pay the arrears by instalments and the tenants goods remain on the premises. If the  payments agreement is broken the enforcement agent has to give two days written notice of intention to re-enter the premises and remove the goods.  It is an offence for the tenant to dispose of the controlled goods without a lawful excuse. 
 
Goods removed by an enforcement agent must be sold at a public auction after giving the tenant at least seven clear days notice.
 
For further information and advice please contact Geoffrey Ellis, Director & Litigation Solicitor, 01527 9123912 or Geoffrey.ellis@thomasguise.co.uk