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Wed 20th May 2009
Rent Arrears are still ‘Distress’-ing

The recovery of rent arrears has always been a headache for Landlords but for commercial Landlords, there is the remedy of 'distress' or entering leased premises and seizing goods to the value of the arrears.

It has long been thought that this remedy is unfair as the Tenant has no opportunity (other than ensuring they have paid their rent on time) to prevent their goods being seized.

The Tribunals, Courts and Enforcements Act 2007 is set to change the remedy of distress (although it is not yet in force.) The new method for recovering rent arrears is known as CRAR: Commercial Rent Arrears Recovery. The differences between CRAR and the existing remedy of distress may seem subtle, but they will prove significant to Landlords who wish to avoid pursuing their tenants through the Courts.

Commercial – the new legislation will make seizure of goods to cover rent arrears far more tricky where the building has an element of residential use.

Rent – Landlords will no longer be able to recover arrears of service charge payments, rates, repair costs, service costs or insurance premiums using this method.

Arrears –There will be a minimum arrears level set, below which this remedy will not be available.

Recovery – The element of surprise will go. A notice must be served on your tenant before removing goods from the premises giving them the opportunity to apply to Court to have the enforcement action stopped or delayed. Only a regulated enforcement officer will be able to remove goods.

Until CRAR comes into force, Landlords may continue to use the remedy of distress but once the new regime is in force, Landlords will need to tread carefully in order to recover their rent arrears without ending up in Court.

If you would like to discuss distress and the alternative methods of rent arrears recovery, please call Park Woodfine Heald Mellows Solicitors Commercial Team on 01234 400000.