A significant change to the way that commercial landlords are able to seize a tenant’s goods, to help recover rent arrears, will come into force in less than two months.
Historically, landlords have been able to use the common law remedy of distress, which has enabled them to seize the goods of a tenant at the leased premises and sell these at auction, to recover rent arrears.
Distress for commercial rent arrears will be abolished by the Tribunals Courts and Enforcement Act 2007, via the Taking Control of Goods Regulations 2013, and instead landlords will have to follow a new process called Commercial Rent Arrears Recovery (CRAR) when seizing a tenant’s goods for failure to pay rent.
CRAR takes effect from 6 April 2014 and some of its key provisions include:
• tenants must be given at least seven clear days’ notice (clear days do not include Sundays or bank holidays) before an enforcement agent can enter to seize their goods. Landlords can apply to court for a shorter notice period if they can show it is likely the debtor may remove goods • CRAR only be used when more than seven days’ rent is owed • under CRAR, bailiffs can only be used on purely commercial premises so any property that is partially let or occupied for residential purposes will be excluded.
Also taking effect in April are new measures that the government relating to private property and bailiffs. They include:
- banning bailiffs from entering homes when only children are present and allowing them to enter property only between 6am and 9pm
- banning landlords from using bailiffs to seize property for residential rent arrears without going to court
- ensuring the debtor is given seven days before bailiffs take control of their goods.
Commercial landlords need to be clear on the new rules to ensure that any action to recover rent arrears is taken fairly and compliantly, to avoid potential legal action