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A Cause of Distress for Commercial Landlords

Liam O’Shea of Astle Paterson’s Dispute Resolution team discusses the effect of the replacement of the remedy of “distress” (a very useful and popular remedy for a commercial landlord in the pursuit of arrears of rent) with Commercial Rent Arrears Recovery (CRAR).

As it stands, Landlords of commercial properties have a “self-help” remedy of distress in which Bailiffs can be employed to seize a commercial tenant’s goods if they fail to pay rent (together with, for example, unpaid insurance premiums, service charges and V.A.T. on the rent).

Distress can take a commercial tenant by surprise – given that no prior notice or Court Order is usually required.

However, the remedy of distress will be replaced as of 6th April 2014 by CRAR: The historical remedy of distress will be abolished.

Unlike distress, CRAR requires at least 7 clear day prior notice (excluding Sundays and Bank Holidays) be given to the tenant – a “Notice of Enforcement”.  As will no doubt become apparent this one change will prove to be a major disadvantage to commercial Landlords – as Liam O’Shea of Astle Paterson’s Dispute Resolution department confirms “On a practicable level this “Notice of Enforcement” will give commercial tenants sufficient time to remove any goods of value from the let premises and will in turn undermine the effectiveness of this remedy.”

Of advantage to commercial Landlords is that CRAR does permit Bailiffs to seize tools of the commercial tenant’s trade (where such tools have a total value of £1,350.00 or more).  However, Liam O’Shea concludes that “Whilst it is unclear how matters will pan-out it does appear that the requirement for prior notice potentially makes CRAR impotent as a method of pursing arrears of rent.  Come 6th April 2014 the death knoll of an extremely useful and common self-help remedy available to commercial landlords will be sounded”.

Should you have any queries regarding the enforcement of the terms of a commercial Lease then please contact Liam O’Shea of Astle Paterson’s Dispute Resolution Team on 01283 531366 or by way of email to loshea@astlepaterson.co.uk.

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