COMMERCIAL RENT ARREARS RECOVERY
The biggest risk in commercial property (other than your tenant trashing the joint) is having your tenant default on rental payments.
How should you initially deal with a rent arrears dispute?
If you have not already done so, speak to your tenant to try and understand the reasons why.
Always refer the tenant to the obligations under the lease. It’s always best to work together to resolve the issues. If you can get a solution, put it in writing.
What if you can’t resolve matters with your tenant?
If after trying that you have no joy and are still out of pocket, it’s time to focus minds and unleash CRAR!
Commercial rent arrears recovery (CRAR) is a protocol used to recover rental arrears. It is governed by the Tribunals Courts and Enforcement Act 2007 (TCEA 2007) and the Taking Control of Goods (Amendment) (Coronavirus) Regulations 2020, if you wanted to look it up!
CRAR enables you to use enforcement agents to take your tenant’s goods and sell them in order to recover an equivalent value to the rental arrears. There are strict protocols at each stage of the process.
CRAR applies to all tenancies of commercial premises BUT only if the tenancy is in writing. If not, CRAR will not apply. Speak to us in that case!
The following conditions must be satisfied before CRAR can be used:
- Your tenant must be in arrears.
- The premises must be for commercial use only. Mixed use and residential premises do not qualify.
- The amount of the arrears must be capable of being calculated with certainty.
- The minimum amount of “net unpaid rent” is currently set at an amount equal to 457 days’ rent (increased from seven to 90, 189, 275 and then 366 days’ rent). This minimum amount of net unpaid rent is due to increase further, to 554 days’ rent, on 24 June 2021.
- Your tenant must be in arrears of the net unpaid rent when control of the goods is taken.
Please also understand that CRAR can only be used to recover the principal rent. It cannot be used to recover other sums such as service charges and insurance premiums.
How can we help you?
By instructing us to be part of your team, we will first need to understand what your position is. Sometimes, a solicitor’s letter can do the trick, or it may be that we deploy CRAR straight away. The enforcement process can only be undertaken by an Enforcement Agent.
We have a very good working relationship with The Sheriff’s Office who are High Court Enforcement Officers. They are extremely pro-active and can undertake this whole process quickly and efficiently.
If you have a tenant who is in arrears, please call for a chat.
All initial enquiries are completely free of charge, so please do not hesitate to call us on 02477 981545.
We can provide a number of funding solutions including a fixed fee quotation.