Prompt recovery of commercial rent arrears via CRAR

Financial pressures on commercial landlords have increased significantly over recent years, with economic factors including high interest, and therefore mortgage rates, high inflation and the risk of negative equity and nervous lenders.

Then add in societal factors that are driving the decline in occupancy rates, particularly the move towards hybrid and remote working where demand for office space is reducing as a result, and cost-of-living pressures affecting many businesses, particularly the retail sector, and the need to ensure tenants are paying on time becomes non-negotiable.

With most commercial rents due on a quarterly basis, the most recent due date being either 25th March (Lady Day) or 1st April, here are the answers to your questions about prompt action if your tenants are in arrears.

What is CRAR?

If payment is not made, the landlord has the right to use CRAR – commercial rent arrears recovery – which came into effect in April 2014 as part of the enactment of part 3 of the Tribunals, Courts and Enforcement Act 2007 (TCE Act).

Section 72 of the Act allows a commercial landlord to instruct Certificated Enforcement Agents under Schedule 12 (taking control of goods) to recover rent payable under the lease from the tenant, without needing to go to court.

What can be recovered under CRAR?

CRAR only covers rent arrears, but not other charges such as insurance or service charges. Those can be recovered under a County Court Judgment (CCJ).

Does CRAR need a court order?

CRAR does not require a court order, but there must be a written lease in place.

How does the landlord start CRAR?

To start CRAR, the landlord must give the tenant seven days' notice of enforcement after the rent becomes overdue. The rent must still be unpaid at the time the notice is served, as well as immediately before the enforcement agents (EAs) take control of any goods belonging to the tenant.

What can the enforcement agents do?

The EAs can enter through an open or unlocked door or other normal means of entry on any day of the week between 06:00 and 21:00, or the tenant’s normal business hours, if those are different.

They can take control of good belonging to the tenant in the premises covered by the lease (the demised premises) up to the value of the arrears and enforcement fees, and will provide a valuation of those items.

What if the tenant still doesn’t pay?

Should the tenant not clear the arrears in full, the controlled goods may be sold at public auction, after seven days' notice of the sale has been given to the tenant.

How to find out more and instruct us

To learn more about CRAR, download our complimentary eBook or give us a ring on 01792 450031.

If you have a case ready to enforce, you can instruct us online.