Posted: Wednesday, 3 September 2008 @ 16:50
Distress is a legal term which refers to a landlord's power to recover a debt from its tenant by entering premises; seizing the tenant's goods to the value of the debt; then selling them to satisfy it.
It has always been an effective remedy for landlords as the presence of bailiffs on the premises can be both an intimidating and embarrassing experience for a tenant .
Tenants will be able to relax therefore when the law of distress is abolished later this year.
In its place will be a new regime called Commercial Rent Arrears Recovery (CRAR).
Unlike distress, where a bailiff could appear on your doorstep unannounced, a landlord will have to serve notice on the tenant before exercising CRAR rights, informing it of the risk of enforcement action. The tenant will be apply to court for the notice to be set aside or for any enforcement action to be delayed.
CRAR rights will allow a tenant's goods to be dealt with on a similar basis to levying distress, with one significant change - a tenant will be able to keep the goods at the property pending payment, under an arrangement known as a 'controlled goods agreement', which acknowledges the landlord's control of the goods.
The benefits to tenants of the new regime are:
Landlords will lose the element of surprise giving tenants time to negotiate or delay payment of arrears
The new regime will only apply to arrears of rent giving a tenant the opportunity to dispute other arrears such as service charges
The requirement for landlords to give tenants advance notice of the intention to seize goods may allow tenants to remove anything of value from the premises
The fact that a tenant's goods (which may include equipment vital to the running of the tenant's business) won't be removed from the premises will allow a tenant to continue to trade unhindered giving it a better chance of paying off the arrears.
Contact commercial property lawyer, Steve Petty, on 01926 629005 for the latest on this change to the law.
Steve Petty, Commercial Property Lawyer
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