Commercial Rent Arrears Recovery: getting your money back without going to court

Commercial Rent Arrears Recovery

Commercial Rent Arrears Recovery (CRAR) replaced the common law right to levy distress in 2014, bringing in stricter regulation for landlords seeking to recover rent arrears from their tenants. There’s now a clear process for recouping those unpaid debts – and it doesn’t always involve having to go to court. This is what you need to know.

The legality of arrears

Once a tenant falls into arrears, either by missing a payment date specified in the lease or by falling over a month behind with rent, they are essentially breaking the terms of their lease. In order to protect your commercial property investment as a landlord, repossession of commercial property may be your best bet. This can be done through peaceable re-entry. But if your tenant has the funds and/or property to cover their debt, you may be better off turning to CRAR to recover the debt. A process which can be undertaken without going to court.

Making the decision

Before you decide whether to opt for debt recovery or eviction, consider the implications of both sides. For starters, the cost of recovery is usually borne by the debtor (tenant), whereas eviction is paid for by the creditor (landlord). But once you opt to recover debt through CRAR, you give up the right to forfeit the lease: so you can’t evict the tenant. If your situation is particularly complicated, it might be wise to seek advice from a qualified solicitor before you act.

Starting the recovery process

Under CRAR, your first move is to give at least seven days’ notice that you intend to start enforcement proceedings. This is a legal requirement, but it may also be enough to spark your tenant to pay their rent. If they don't, a certificated Enforcement Agent can obtain permission from the courts to start enforcement proceedings within 24 hours. Agents may enter the property to seize goods. These can then be held until the tenant pays, or auctioned off.

Ensuring CRAR is successful

Tenants sometimes have ways of disrupting the process, such as paying down their debt to seven days' arrears or arguing that certain equipment is essential to their business. That's why finding an experienced Enforcement Agent is so important.

To begin enforcement action, or find out more about the CRAR process, contact Dukes Bailiffs today.