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COmmercial rent arrears recovery (CRAR)
Commercial Rent Arrears Recovery Service (CRAR)
As a landlord of commercial property, you may well, unfortunately, find yourself in dispute with your tenant. If you do, it is vital that you get the best possible advice from a real expert in this complex area. Our Commercial Debt recovery and commercial rent arrears team can provide personal and professional strategic advice to guide you through the legislation protecting you as a commercial landlord. From our offices across North Wales and Cheshire, we can respond to your needs wherever your business operates, and can assure you that you will receive our usual outstanding service.
What is involved in a commercial rent arrears claim?
Commercial Rent Arrears Recovery (CRAR) is a power derived from legislation, and allows a landlord to recover rent payable by a tenant under a commercial lease. The process involves an enforcement agent taking control of the tenant’s assets and selling them to recover the money owed to you. As such, the requirements for making a successful claim are strict, but our dedicated solicitors will be able to advise you every step of the way.
Making use of the CRAR power requires a landlord to authorise an enforcement agent the power to take control of the tenant’s property and assets therein. We can advise you on whether this action is appropriate in your specific case (see below), and can help you with all the strategic decisions and documentation which is required. Before you proceed with the CRAR process, however, it is important to make sure that it is appropriate for you and the circumstances of your case.
Is CRAR appropriate for my case?
- CRAR is only available under the terms of a written commercial lease. This means that it is not possible to use CRAR if any residential premises are included in the lease (which is sometimes the case with pubs, or premises which combine a shop and a flat). This is one reason why you should ensure that, if you are renting out a combination of commercial and residential properties, you do so under separate leases.
- Making use of CRAR means that you waive your write to forfeiture of the lease. In some circumstances, forfeiture may be a better course of action if there are other existing breaches of the terms of the lease.
- Only basic rent, amounting to at least seven days’ unpaid rent, can be recovered under the CRAR provisions. Even if other payments are reserved as rent under the terms of the lease (for example, rates, service charges, insurance, repair and maintenance costs), they will not be considered as “rent” for the purposes of CRAR, and will therefore be excluded from your claim. If these additional charges are included in an inclusive rent clause, only that amount of the rent which is “reasonably attributable” to the tenant’s possession and use of the premises will be included in any CRAR claim.
- There are restrictions on the property which can be seized. Only property owned by the tenant can be subject to the CRAR process, and only goods up to the value of the debt. Any property which is for the debtor’s personal or professional use, up to the value of £1,350, cannot be seized.
- You must give the tenant at least seven days’ notice, in writing, before entering the premises. This is important, as it does give your tenant the chance to remove their property from the premises, thereby putting it out of the reach of the enforcement agent. If you have any concerns that your tenant may attempt to do this, make sure you speak to your dedicated solicitor for expert advice.
- You must also give at least seven days’ notice ahead of any sale of the property secured by the enforcement agent. It is possible to arrange for an earlier sale, in circumstances when waiting seven days would substantially reduce the value of the property, or would render it unsalable.
- You must use an enforcement agent to take control of the tenant’s assets. This needs to be authorised by you in writing. The enforcement agent can then, after the required notice period has elapsed, enter the premises to either take control of the property and physically secure it at the premises, or take the property to a different location. Where this is not possible, we can advise you on the terms of a controlled goods agreement, under which the tenant agrees not to remove of dispose of the goods before the rent arrears is settled.
- The enforcement agent is entitled to recover their costs. If the recovery of the property took place with a high court writ, the enforcement agent can charge a percentage fee of any amount over £1,000 (the percentage fee applies to anything over £1,500 if the recovery happens without a high court writ). Below this amount, the enforcement agent will charge a fixed fee.
- You can require any sub-tenant to pay rent directly to you to recover any arrears. The process is still to CRAR, but fourteen days’ notice is required, as opposed to seven.
Contact the Commercial Rent Arrears Recovery team at PSR
The CRAR provisions provide commercial landlords with important protections against rent arrears, however the law is complex, and the requirements are stringent. As such, expert legal advice is vital. Established in 2009, PSR is recognised as a leading law firm in respect of commercial rent arrears recovery across North Wales and Cheshire. With offices in Colwyn Bay, Shotton (Deeside), Wrexham and Ellesmere Port, we are perfectly positioned to help, advise and take action to recover your money.
We are here to make everything as straightforward as possible for you. Over half of our current clients came to us on the recommendation of our previous clients, so you can be confident that we will live up to our promises. Our locations and expertise make us an ideal choice for commercial clients right across the North West, including Liverpool and Merseyside.
The strength of our team means we regularly work for commercial clients in all areas of England, Wales and Northern Ireland, so call us today, or use the enquiry form on the right-hand side of this page.
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