As a commercial landlord, there are a few options available to you if you find your tenant is in rent arrears. If you’re not interested in or ready to forfeit the lease, and just want to recover the rent, CRAR (Commercial Rent Arrears Recovery) may be a good option for you.
| What is Commercial Rent Arrears Recovery (CRAR)?
CRAR allows landlords to seize a tenant’s goods from the premises in order to recover unpaid rent.
CRAR also allows landlords to recover rent from sub-tenants, by serving notice requiring them to pay rent direct to the landlord, rather than the tenant.
| When can a landlord use CRAR?
Landlords can only use CRAR to recover rent in relation to leases of commercial premises.
A landlord can only exercise CRAR against pure rent. This means the amount payable under the lease for the possession and use of the premises. It does not include other arrears, such as service charges.
| Prior notice to the tenant
Before exercising CRAR, an enforcement agent must give notice of enforcement to the tenant.
| What goods can a landlord take using CRAR?
An enforcement agent may only take control of goods which belong to the tenant, and which are either in the premises or on a highway in England and Wales.
A landlord cannot take the following exempt goods into control:
- Clothing, bedding, furniture, household equipment, items and provisions as are reasonably required to satisfy the basic domestic needs of the tenant and their household;
- Assistance dogs and domestic pets;
- Any vehicle used by a disabled person;
- Any vehicle used for police, fire, ambulance or other health emergency purpose; and
- Any goods that are also premises and are occupied by the debtor or another person as their only or principal home.
| Effect of CRAR – sale of the goods
Once they have seized the goods, the enforcement agents must obtain a valuation of the goods. They must then provide this valuation to the tenant and any co-owner of the goods.
The goods can then be sold. Proceeds from the sale of any goods or any money taken will be used to pay the outstanding rent, including the landlord’s costs.
Exercising CRAR will waive a landlord’s right to forfeit the lease that may have arisen. Landlords should therefore first obtain specialist legal advice to consider whether they wish to forfeit before taking any steps to exercise CRAR. to discuss your options for recovering commercial rent arrears, contact our team on 0800 988 7756 or through our online form.
