Commercial Rent Arrears Recovery to come into force on 6 April 2014

From 6 April 2014 landlords of all*commercial leasehold premises will be able to benefit from this new method of enforcement.

Commercial Rent Arrears Recovery (CRAR) will be governed by the Tribunals Courts and Enforcement Act 2007 and Taking Control of Goods Regulations (TCGR) 2013. CRAR will replace the old common law remedy of distress, which will be abolished.

CRAR entitles a landlord of commercial premises to instruct an enforcement agent to seize goods from the tenant’s premises and sell them to recover an equivalent value of the rent arrears when the “net unpaid rent” is equal to at least 7 days’ rent. CRAR is conditional upon certain notices and information being served on the tenant throughout the process, as set out in paragraph 7, Schedule 12, TCEA 2007. The net unpaid rent is also only in relation to “pure rent” and will therefore exclude other payments such as service charge and insurance rent.

However, landlords should exercise this remedy with caution as using CRAR will waive any rights of forfeiture they may have under the lease.

*CRAR only applies to commercial premises where there is a written lease and special rules apply for agricultural holdings.

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