Posted: Monday, 24 March 2014 @ 15:04
The new system of commercial rent arrears recovery (CRAR) comes into force on 6 April 2014.
All the necessary regulations have now been published. So from 6 April landlords will not be able to send in the bailiffs without notice to recover arrears. A whole new system of rent enforcement comes into play, with statutory notices.
To recap on my previous blogs on the subject, the key points are as follows:
1.The law of distress is abolished. It will only be possible to seize goods through the new CRAR procedure.
2. If the lease includes residential property, the landlord will not be able to use the procedure.
3. CRAR will not be available for verbal tenancies-there must be a written agreement in place. CRAR is available for tenancies at will but not for a tenancy at sufferance or occupation under a mere licence.
4. CRAR is only available for the recovery of rent, the payment for occupation. It does not include service or other charges, even if they are defined as rent in the lease.
5. The landlord will have to instruct an enforcement agent to give the tenant a written notice in the prescribed form calculating the rent which has fallen due and is unpaid, any interest payable, and any VAT applicable. There must be at least 7 days' unpaid rent, and the minimum period of notice in writing is 7 days.
6. Once the written notice has been served by the enforcement agent, the tenant has the option of applying to the court, and the court will have the power to set aside the notice or delay its execution.
7. Only authorised enforcement agents who hold a valid certificate to act as an enforcement agent issued by a judge of the county court will be able to serve notices and seize goods when the CRAR notice has expired.
8. The way in which enforcement takes place is specified in the new CRAR procedure. For example, control of the goods can take place any day of the week between 6 am and 9 pm, but can take place at other times if the business is open for trade.
9. There are stautory fees which the enforcement ageny can charge the tenant for each stage of the process. See my blog of 5 February 2014.
9. There is a new procedure for head landlords to serve notice on sub-tenants making them liable to pay rent directly to the head landlord and giving the head landlord the right to recover against the sub-tenant.
10. There are some fine points to look out for. For example, the 7 days notice is 7 clear days excluding Sunday, Good Friday, Christmas Day and bank holidays. So it can be 10 days or more after the notice is served before further action can be taken. Also note that if rent is payable quarterly, it is inevitable that as soon as the tenant has defaulted there will automatically be at least 7 days rent due so the statutory notice can then be given immediately.
Business and Litigation Solicitor
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Blog by Nigel Musgrove
Nigel has been providing dispute resolution advice as a solicitor for over 35 years. As well as advising SMEs and business owners on disputes he also offers a specialist licensing law service. View profile
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