Commercial Rent Arrears Recovery – no longer quite so distressing for tenants

The ancient right of “distress” for rent arrears recovery relating to commercial property entitled a landlord to enter property let to its tenant, seize goods, and hold them until rent arrears have been settled, or sell goods to recover the outstanding rent. Until very recently, it had remained a popular method of enforcement by landlords, given that it was both cheap and effective. Tenants had long seen the law of distress as outdated and aggressive.

Following many years of deliberation by various governments, the law of distress was finally abolished on 6 April 2014, and was replaced by the new statutory procedure termed “Commercial Rent Arrears Recovery” (CRAR).

There are various subtle differences between the law of distress and CRAR. However, the principle practical change is that whereas under the law of distress the landlord was not required to give any notice to the tenant that it intended to enter the premises to exercise that right, under CRAR the landlord must give the tenant at least 7 clear days’ notice before CRAR is exercised.

This change is clearly not to the landlord’s advantage, as it gives the tenant an opportunity to remove valuable items from the premises in anticipation of the visit from the enforcement agent. From the tenant’s perspective, this is a positive change as it protects them from being in the sudden position of having to find money urgently to avoid loss of goods. It also saves the professional embarrassment of an unexpected visit from the bailiffs.Contact our Commercial Property Team on 020 8502 3991 for more information.