CRAR - Commercial Rent Arrears Recovery
CRAR was introduced as part of the Tribunals, Courts and Enforcement Act 2007 Part 3 and the Taking Control of Goods Regulations 2013, both of which came into effect in April 2014.
Whilst this did add some constraints that were not in place under the previous Common Law regime of distress for rent, CRAR remains an extremely effectively method for recovering commercial rent arrears.
No court action
CRAR allows the landlord to instruct certificated enforcement agents to enter the premises to take control of the tenant's goods to sell at auction to recover the outstanding rent, should payment not be forthcoming. Court action is not required.
Certificated enforcement agent only
CRAR may only be enforced by a certificated enforcement agent (you will find that all the enforcement agents at HCE Group are certificated). Under CRAR, the landlord is no longer permitted to act himself.
Commercial premises only
The premises must be purely for commercial use, there must be a written lease in place between the landlord and tenant, and the rent must be overdue by 7 days.
CRAR may only be used to recover the actual rent that is owed, and cannot include other unpaid charges such as service charges. To recover those, court action would be required to obtain a county court judgment (CCJ) and a writ of control if enforcement is required.
Notice of enforcement
A notice of enforcement will be sent, giving the tenant 7 clear days (excluding the day of despatch, Sundays and bank holidays) in which to pay in full to prevent enforcement action. The tenant does have the right at this point to apply to court for a stay of execution.
The certificated enforcement agent can take control of goods, up to the value of the rent plus costs owing, and must provide the tenant with a valuation of the goods taken. If agreeable to the landlord, the tenant is permitted to enter into a payment arrangement.
If there are sub-tenants in the premises, the landlord must give them 14 days’ notice that, while there are still arears, the sub-tenants must pay their rent directly to the landlord until the arrears have been cleared or the notice withdrawn.
If you would like to know more about using CRAR, please get in contact.