Quarter days and commercial rent arrears
In England and Wales, commercial rent is normally payable quarterly in advance. Traditionally these are known as “quarter days” and have been in use for centuries.
The dates they fall on are – 25th March (Lady Day), 24th June (Midsummer Day), 29th September (Michaelmas) and 25th December (Christmas Day).
Whilst many commercial landlords still use these dates, others have moved over to set the first day of the month for January, April, July and October as the due date for rent.
What is CRAR
If the rent is not paid by the due date, the landlord may recover the arrears using CRAR – Commercial Rent Arrears Recovery – which was introduced in April 2014 under the Tribunals Courts and Enforcement Act 2007, Part 3.
CRAR does not require a court order. It may only be used for the recovery of rent (and VAT) in purely commercial premises. It cannot be used to recover any other charges due, such as service charges or insurance.
There must be a written rental agreement or lease in place to use CRAR, and the lease may not have been terminated.
When to use CRAR
The rent must be seven days in arrears before CRAR can be used. Once the rent is in arrears, 7 clear days’ notice of enforcement must be sent to the tenant. When calculating the notice period, Sundays and banks holidays are not included.
It is possible to ask the court for permission to shorten the notice period if there is a strong likelihood of the tenant removing assets during the notice period.
How CRAR is enforced
CRAR is enforced by certificated enforcement agents (EA). They enter the premises through a door or any other normal method of entry, such as a loading bay.
In a process not dissimilar to that of the execution of a writ of control, the EAs will take control of the tenant’s goods, which may either be removed for sale or left in situ under a controlled goods agreement where a payment plan has been agreed. The controlled goods agreement will remain in place until the arrears have been paid in full.
If payment is not forthcoming and the goods do need to be sold, the tenant must be given 7 days’ notice of sale.
Forfeiture of lease
Because the lease must be valid to use CRAR, a landlord wishing to recover the property after recovering the arrears should forfeit the lease the day after CRAR or at a later date, provided the tenant remains in breach of the lease at that point.
If the landlord is more concerned about recovering the property than the rent arrears, he can forego the CRAR notice period and forfeit the lease once the rent becomes overdue – this date will be stipulated in the lease and is often set at 21 days.
If you would like to know more about recovering commercial rent arrears or forfeiture of lease, please do get in touch on 08450 999 666. We have a nationwide team of employed certificated enforcement agents and can act promptly on your behalf.