Commercial rent arrears recovery (CRAR)

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Recovering rent arrears in a commercial setting can be a complex and stressful process for landlords.

When tenants fall behind on their rent, it can lead to significant financial strain and disrupt the cash flow needed to maintain the property and fulfil other obligations. At Moore Barlow, our team of experienced solicitors is here to assist landlords with effective commercial rent arrears recovery, ensuring that you can secure the income you are owed and protect your investment.

Commercial rent arrears can arise for various reasons, from tenant cash flow issues to disputes over lease terms. Regardless of the cause, prompt action is essential to prevent arrears from escalating into more serious financial problems. Our legal team provides strategic advice tailored to your specific situation, helping you navigate the recovery process with confidence.

With extensive experience in dealing with commercial rent arrears, we advise on a range of legal solutions designed to recover outstanding payments efficiently. Our approach is focused on minimising disruption to your business while ensuring that your rights as a landlord are fully protected.

Chris Marsden

Chris Marsden

Partner | Real estate disputes

023 8202 5036

What is rent arrears?

Commercial rent arrears recovery (CRAR) allows landlords of commercial properties to recover rent arrears. CRAR applies only to unpaid rent, VAT, and interest, and cannot be used for service charges, insurance rent, or other amounts owed under the lease.

The process requires an enforcement agent to issue the tenant with 7 days’ written notice. After this period, the agent can enter the property, take control of the tenant’s goods, and sell them to cover the debt.

CRAR is limited to written commercial leases. If the lease is not in writing, this method cannot be used. The rent must remain unpaid when the notice is served and immediately before any goods are seized.

Can a landlord recover rent arrears?

Yes, a landlord can recover rent arrears. In the UK, landlords have several options to recover unpaid rent from commercial tenants, including using the Commercial Rent Arrears Recovery (CRAR) process, negotiating a payment plan, issuing a statutory demand, or taking legal action such as obtaining a court order or forfeiting the lease.

The specific approach will depend on the terms of the lease and the amount of arrears owed. Seeking legal advice is recommended to ensure the correct procedures are followed.

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What is commercial rent arrears recovery?

Commercial rent arrears recovery is the legal process by which landlords seek to recover unpaid rent from tenants in a commercial property. The goal is to recover the outstanding rent as quickly as possible while maintaining the landlord’s rights under the lease agreement.

How to claim rent arrears from tenant

If your tenant is in rent arrears, we suggest you take legal advice as to the most appropriate course of action. You could start by sending a formal demand for payment, detailing the outstanding amount and any late fees, but this may not always be appropriate. If the tenant doesn’t pay, you could consider negotiating a repayment plan. You may also be entitled to pursue legal action, such as obtaining a court order, using the Commercial Rent Arrears Recovery (CRAR) process for commercial properties, or seeking possession of the property through eviction proceedings.

What are the rules for commercial rent arrears recovery?

The rules for commercial rent arrears recovery in the UK are governed by specific legal frameworks that landlords must follow:

  1. Commercial rent arrears recovery (CRAR): CRAR allows landlords to recover rent arrears by taking control of a tenant’s goods. It can only be used for pure rent arrears (excluding service charges or insurance) and requires a minimum of seven days’ rent to be outstanding.
  2. Notice requirements: Before exercising CRAR, landlords must serve a seven-day notice of enforcement on the tenant, giving them time to pay the arrears.
  3. Legal action: Landlords can also pursue rent arrears through legal action, such as obtaining a court order or issuing a statutory demand. If the tenant fails to pay, this could lead to insolvency proceedings.
  4. Forfeiture of lease: If the lease permits, landlords may forfeit the lease and take back possession of the property due to rent arrears, typically requiring peaceable re-entry or a court order. If you are considering forfeiture action, we recommend you take legal advice before taking any action in relation to the arrears owed.
  5. Alternative dispute resolution: Before taking formal action, landlords should consider negotiating payment plans or using mediation to resolve the dispute.

Understanding these rules and seeking legal advice early can help landlords recover commercial rent arrears effectively while complying with legal obligations.

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How we can help with commercial rent arrears recovery

At Moore Barlow, our solicitors are experts in managing the complexities of commercial rent arrears recovery. We begin by reviewing the lease agreement and the circumstances leading to the arrears, allowing us to advise you on the most effective course of action. Whether it involves negotiating a payment plan, serving statutory demands, or taking legal action, our team is equipped to handle every aspect of the recovery process.

We offer guidance on the best strategies to recover arrears, including the use of Commercial Rent Arrears Recovery (CRAR) procedures, which allow landlords to take control of a tenant’s goods to recover the debt. Additionally, we can assist with other enforcement actions, such as obtaining a money judgment or instructing bailiffs to recover the owed rent.

Our approach is always pragmatic and commercially focused, aiming to recover the outstanding rent while maintaining a positive relationship with the tenant where possible. We understand that each case is unique, and we tailor our services to meet the specific needs of your situation.

Can you evict a commercial tenant for not paying rent?

Yes, it may be possible for a commercial landlord in the UK can evict a tenant for not paying rent.. The lease may require the landlord to provide notice and the landlord may first need to obtain a court order.

How far back can rent arrears be claimed?

In the UK, rent arrears can generally be claimed for up to six years from the date the arrears first became due. This time limit is set by the Limitation Act 1980, which applies to most types of debt, including rent arrears. After six years, the debt is typically considered time-barred, and legal action to recover the arrears may not be possible.

Can rent arrears be written off?

Yes, rent arrears can be written off, but this usually requires agreement between the landlord and tenant. In some cases, a landlord may choose to write off arrears if they believe recovery is unlikely or as part of a negotiated settlement.

Alternatively, rent arrears may be written off if a tenant is declared bankrupt, and the landlord cannot recover the debt through the bankruptcy proceedings. However, this decision is ultimately at the discretion of the landlord and is often considered a last resort.

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Can a commercial landlord send bailiffs?

Yes, a commercial landlord can send enforcement agents/bailiffs to recover rent arrears through the Commercial Rent Arrears Recovery (CRAR) process. This allows landlords to instruct enforcement agents to take control of a tenant’s goods to recover outstanding rent. However, landlords must follow specific legal procedures, including serving the tenant with a seven-day notice of enforcement before enforcement agents can be sent.

As part of the CRAR procedure, enforcement agents can only be used to recover unpaid rent, not other charges like service charges or insurance. It’s important for landlords to seek legal advice to ensure compliance with the law when using CRAR.

Contact us

If you are dealing with commercial rent arrears, don’t delay in seeking professional advice. Contact our expert team of commercial rent arrears recovery solicitors today to discuss your case. With offices in London, Richmond, Southampton, Guildford, Lymington, and Woking, we are ideally placed to provide you with the support you need, both locally and nationally. Reach out to us for a confidential consultation and let us help you recover the rent you are owed efficiently and effectively.

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