If you are a commercial property owner or landlord, one of the most frustrating situations you may encounter is when your tenant falls behind on rent payments. When traditional methods of collecting rent fail, landlords may turn to bailiffs to recover the unpaid rent, known as commercial rent arrears recovery (CRAR).
What is CRAR?
Commercial Rent Arrears Recovery (CRAR) is a process by which commercial landlords can take control of goods owned by a tenant in order to recover overdue rent. The power of CRAR is governed by the Tribunals, Courts and Enforcement Act 2007 and the Taking Control of Goods Regulations 2014.
How does CRAR work?
In order to use CRAR, the landlord must serve a notice on the tenant at least 7 days before taking control of the goods. The notice must contain specific information, including the amount of rent owed, how the rent should be paid, and the deadline for payment.
Once the notice period has expired, the landlord can instruct a certified enforcement agent, commonly known as a bailiff, to visit the premises and take control of goods belonging to the tenant. The goods will then be valued and sold to recover the amount owed.
It is important to note that certain items are exempt from CRAR, such as tools and equipment necessary for the tenant’s work, and items belonging to a third party.
When can CRAR be used?
CRAR can only be used to recover rent arrears that are at least 7 days overdue. It cannot be used for other types of debt, such as service charges or insurance premiums.
It is also worth noting that CRAR is only available for commercial properties. Residential landlords cannot use this procedure to recover unpaid rent.
What if the tenant refuses to pay?
If the tenant refuses to pay the rent or disputes the amount owed, the landlord can continue with the CRAR process. The enforcement agent may take control of goods and sell them at auction to recover the debt.
If the goods are not enough to cover the full amount owed, the landlord may need to consider other legal options, such as taking the tenant to court to seek a county court judgment or pursuing bankruptcy proceedings.
How can landlords avoid rent arrears?
Prevention is always better than cure, and landlords can take steps to minimize the risk of rent arrears.
1. Conduct thorough tenant screening: Before signing a lease agreement, landlords should conduct a background check on prospective tenants to assess their financial stability and rental history.
2. Set clear payment terms: Clearly outline the rent due date, payment methods, and consequences of late payment in the lease agreement.
3. Stay in communication with tenants: Establish open lines of communication with tenants and address any issues or concerns promptly.
4. Act quickly: If a tenant falls behind on rent, take immediate action to collect the arrears before the situation escalates.
While CRAR can be an effective tool for landlords to recover unpaid rent, it is important to consider the potential impact on the tenant’s business and the relationship between landlord and tenant. It is always advisable to seek legal advice before taking any enforcement action.
In conclusion, dealing with bailiff commercial rent arrears can be a challenging and complex process. By understanding how CRAR works and taking proactive measures to prevent rent arrears, landlords can protect their investments and maintain positive relationships with tenants.