How Does Commercial Rent Arrears Recovery Work?

Commercial Rent Arrears Recovery is a detailed process involving four steps.

Step One: Written Warning Notice

Enforcement Agents must provide 7 daysí notice of an intended action.
The notice should include:

- Specific details of the debt
- The date the notice was issued
- Contact details of the Enforcement Agent
- Methods of payment

Step Two: Taking Control of Goods
The Enforcement agent can attend at the demise premises on any day of the week between 6am and 9pm, provided the tenant has been given 7 days advance notice. The new Act replaces Walking Possession with a Controlled Goods Agreement.

A Controlled Goods Agreement will state that the Enforcement Agent is in control of the goods and that they cannot be disposed of by the tenant without authority from the agent.

Step Three: Re-entry after a Controlled Goods Agreement
In order to re-enter the premises an Enforcement Agent must give 2 clear daysí notice of re-entry.
Re-entry must occur between 6am and 9pm unless the business operates outside of these hours.

Step Four: Sale of Goods
There is now a statutory requirement to obtain a valuation before selling goods. This must be given by an independent and qualified valuer.

The notice of sale must be within 12 months of taking control of the goods and there should be a minimum notice period of 7 days for the sale to be valid.

The notice of sale must contain:

- Details of the proposed sale
- The Enforcement Agents details
- All relevant reference numbers
- The amount outstanding at the date of the notice
- A date and time by which the outstanding sum must be paid to prevent the goods being sold.


Applying Commercial Rent Arrears Recovery

Commercial Rent Arrears Recovery can be applied under the following circumstances.

Pure Rent
Commercial Rent Arrears Recovery can be used to collect pure rent, which is the amount payable under the lease for the possession and use of the premises together with any interest on that amount and any VAT chargeable.

Premises
The property or any part of it must not be a dwelling and must be solely used for commercial purposes.

Tenancy
Before Commercial Rent Arrears Recovery can be used a lease must be in place. The 2007 Act defines a lease as tenancy in law or equity, including a tenancy at will. A tenancy at will must be evidenced in writing. The process of CRAR cannot be used when a tenant has a licence agreement.

Minimum Amount
Commercial Rent Arrears Recovery can be exercised to recover rent that has become due and payable prior to notice being given or is capable of being calculated with certainty.

The landlord may instruct the Enforcement Agent to act the day following the rent being due as long as the debtor is in arrears by more than the minimum 7 days.

Control of Goods
Only goods of the tenant may be controlled, any goods at the premises belonging to a third party cannot be taken into control.

Sub-tenants
The Landlord has the right to rent paid from a sub-tenant to a tenant. Sub-tenants must be given 14 daysí notice.
Pass for overdue enforcement
© Rivington Associates l Powered by Reach New Media