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Collection of Commercial Rent Arrears

collection of unpaid commercial rent arrears

Dealing with Unpaid Commercial Rent Arrears

Any Landlord in England and Wales who is faced with a Tenant who has to deal with the collection of Unpaid Commercial Rent Arrears has a number of options to recover it . The two main options are that they can take steps to terminate the lease or attempt collecting unpaid commercial rent arrears. If the Commercial Landlord decides they want to recover the rent arrears,  they may find the Commercial Rent Arrears Recovery Scheme (CRAR) a swift option for collection.

‘The commercial rent arrears recovery scheme is a expedient and lawful remedy for Commercial landlords which allows them to seize and sell a tenant’s goods and chattels to cover the value of the outstanding rent arrears.  There are some limitations on the circumstances in which the scheme applies, but outside of these restrictions it is viewed as a quick option to collect what is owed.

Most Commercial landlords will have to deal with a tenant in arrears with their commercial rent at some stage so if and when that situation arises, every case should be treated on its own merit. The circumstances of Commercial Rent arrears and their leases tend to differ greatly but the main options to deal with the problem are:

  1. Forfeiture
  2. Commercial Rent Arrears Recovery (CRAR)
  3. Pursuing a guarantor

1.  Forfeiture

Forfeiture, or “re-entry”, is the landlord’s right to terminate the lease if the tenant is in breach of any of its covenants.

Many commercial leases provide for the landlord to have the right of re-entry if rent remains unpaid for a specific period of time.  If the provisions for re-entry within the lease have been satisfied, the landlord can in most cases peaceably re-enter the property and recover possession of the respective premises.  This is often performed by Certificated Bailiffs who will enter the property and changing the locks.  As with any situation, the Landlord needs to assess whether it is in their long term interests to do this.

Where there are not satisfactory goods to cover the Commercial Rent arrears, further action can be taken against the company or individuals by way of Debt Collection.

2.  CRAR

In April 2014 the common law remedy of distress ceased to exist and a new procedure for the collection of unpaid commercial rent arrears (CRAR) was introduced. Essentially, the procedure allows Commercial Landlords to use an enforcement agent to seize tenant’s goods and sell them in order to cover the total value of the rent arrears.  The enforcement agent must serve notices on the tenant setting out clearly information on the various stages in which the procedure is being used.

3.  Pursuing a guarantor

When a person or other Company has agreed to act as a guarantor for the tenant’s covenants under any commercial lease, it is entirely at the landlords discretion if they wish to pursue the guarantor for any outstanding commercial rent arrears. to consider pursuing them if the tenant is in arrears of rent.

Evicted them and there are Unpaid Commercial Rent Arrears?

Using a Professional and Experienced Business Debt Collection Agency can help recover any short fall in unpaid Commercial rent arrears following a commercial tenant leaving the property. If the lease was with an individual then they can be pursued at their home address. Alternatively, if it was a Limited Company then they are still liable for any arrears and action can be taken.

If the collection of unpaid commercial rent arrears is dealt with properly then it can see you reunited with lost revenue.

Summary

The Collection of Unpaid Commercial Rent Arrears from a Commercial tenant is always going to be a challenging scenario but with the right assistance from experienced Professionals, it can be well navigated to ensure any losses (if any) are kept to a minimum. It is very different than the collection of unpaid rent arrears for private and domestic properties.`

A Commercial Landlord should never write off unpaid Commercial Rent Arrears even if they are no longer in the premises. If you are a Commercial Landlord that is owed money, then why not give our friendly team a call today for immediate advice and assistance.