Debt Recovery Guide: What is Commercial Rent Arrears Recovery?

Are you spending too much time chasing unpaid debts? Working with a third-party debt collection agency like Dukes Bailiffs Limited can help you take a specialised and effective commercial debt recovery (CRAR) approach.

What is CRAR?

Commercial Rent Arrears Recovery is a statutory process that allows commercial landlords to recover rent lost by tenants who cannot pay by seizing the tenant's goods.

A landlord should provide 7 days' notice to enforce CRAR. Only after this period can certified enforcement agents enter the property through an open or unlocked door to take control of the goods.

Choosing the right company is vital. At Dukes Bailiffs Ltd, we recover commercial rent arrears, prioritising your reputation and maintaining positive tenant-landlord relations.

Who Does it Apply to?

The commercial rent arrears recovery process applies to tenants who rent commercial properties in the UK and end up owing money to their landlord by failing to pay.

CRAR is specifically designed for commercial property relationships. Landlords cannot use this process for residential or mixed-use properties where part of the premises is used as a residence. The legislation is intended to provide commercial landlords with a structured and legal avenue to recover unpaid rent while protecting the rights of commercial tenants.

It's important to note that CRAR only applies to written leases and cannot be used for verbal agreements.

I'm a landlord. How do I begin CRAR?

Notice stage

Many commercial debt collection and recovery companies require the completion of a Warrant of Control before a commercial bailiff can take action. A Warrant of Control is a legal document used in debt recovery that permits a bailiff to take control of a debtor's goods to settle funds owed. You must complete this before a debt recovery agency can proceed.

When selecting a debt recovery agency, ensure they are certified and authorised to carry out CRAR. Verification of their credentials can save you from potential legal complications down the line. A reputable agency will have enforcement agents certified under the Tribunals, Courts & Enforcement Act 2007 and follow the strict regulations governing the CRAR procedure.

Enforcement

A specialist team will begin enforcement action and work to recover rent by issuing a Notice of Enforcement to your tenant. This 7-day notice will explain the intention to recover unpaid rent and offer details of how to make payment. Depending on your preferences, you may request payment in full or provide a short-term payment plan, which the agency will monitor from start to finish.

You should maintain accurate records of all communications and actions during this period.

Recovery of Funds Owed

If the tenant fails to make payment within the 7-day window or the agreed payment timeframe, certified agents will visit the property and seize the goods. These will then be sold at a public auction to cover the cost of arrears.

Enforcement agents must provide an inventory of all goods taken and cannot remove certain exempt items. The sale must be conducted to achieve the best price reasonably obtainable in the circumstances. Debt collection agencies must return surplus funds to the tenant after covering the debt.

Legal Requirements for CRAR Implementation

For CRAR to be legally implemented, several conditions must be met:

1. The property must be wholly commercial with no residential element

2. The lease must be in writing

3. There must be a minimum of 7 days' rent outstanding

4. The tenant must still be in occupation of the premises

5. The landlord must instruct an authorised and certified enforcement agent

Failing to meet these requirements can invalidate the CRAR process and potentially expose the landlord to claims for damages or trespass.

Are There Any Time Limits on CRAR?

Landlords and bailiffs must take enforcement action within 12 months of the date of the enforcement notice. This period can be extended by court order, provided there is evidence that the landlord and/or enforcement agent had reasonable grounds for not seizing the goods.

Once goods have been claimed, they must be valued within 7 days, and the sale typically must occur within 7 days after valuation. These timeframes ensure the process moves efficiently, allowing tenants to settle their debts before losing their assets.

I've received a Notice of Enforcement, but did not rent the premises during the time specified:

If you are not the person named on the notice, please fill in this form and include one of the following:

• A Tenancy Agreement

• A Council Tax Bill

• A Utility Bill (gas, electricity, water, internet, landline telephone)

Responding quickly to incorrectly addressed notices is vital to avoid unnecessary complications.

I'm a tenant. What are my rights under the recovery of commercial arrears?

If you're a tenant, it's important to know the following:

• Once you receive an enforcement notice, all goods must remain on the property and cannot be sold or removed

• You can apply to the court for a delay of execution should you have grounds to delay enforcement

• Items can only be seized between 6 am and 9 pm (or standard business hours if they differ)

• Certain goods are exempt from being taken, such as items necessary for your trade (up to a value of £1350) and items that do not belong to you or have been rented

• You must receive an inventory of everything seized by the enforcement agent.

• You still own some of the goods previously located on the premises

As a tenant, you also have the right to contest the amount claimed if you believe it to be incorrect. You should do this promptly and in writing, with supporting evidence where possible. The enforcement agent must consider your objection and respond accordingly.

In some of the cases, you may be eligible for a delay:

Insolvency Proceedings

If your business has entered formal insolvency proceedings such as administration, liquidation, or a Company Voluntary Arrangement (CVA), this can affect the landlord's ability to use CRAR. Once insolvency proceedings have begun, a moratorium (legal pause) applies to prevent creditors from taking individual action outside the insolvency process.

In such cases, the landlord must participate in the insolvency proceedings as a creditor rather than pursuing CRAR independently. This ensures all creditors are treated fairly.

You're Making a Genuine Attempt to Pay

If you can demonstrate that you're making genuine efforts to pay the arrears, the court may grant a temporary stay of enforcement. This could include showing evidence of the following:

• An agreed payment plan with the landlord that you're adhering to

• Pending receipt of funds that will enable payment

• Temporary financial hardship from which the business is expected to recover

• Disputes regarding the calculation of rent or other lease terms that affect the amount due

Benefits of Professional CRAR Services

Working with professional debt recovery specialists for CRAR offers several advantages:

1. Legal compliance: Professional agencies keep up to date with the latest regulations and ensure all actions are legal and comply with current legislation

2. Efficiency: Experienced enforcement agents protect your investments and help you reach a quick resolution

3. Good record keeping: Proper record-keeping throughout the process protects all parties and saves you time

4. Reputation management: Professional agencies understand the importance of handling matters discreetly to preserve business relationships

5. Cost-effectiveness: The fees for professional services can often be recovered as part of the enforcement process

   
   

At Dukes Bailiffs Ltd, our team of certified enforcement agents are specialists in commercial rent recovery. We know that there is a delicate balance between recovering the debt owed to you and maintaining professional relationships between landlords and tenants. We ensure all legal requirements are met while treating all parties with dignity and respect.

Contact our specialist team today for more information on how we can assist with your commercial rent arrears eviction process.