If you’re a landlord dealing with commercial rent arrears, it can feel like a frustrating and uncertain situation. However, thanks to Commercial Rent Arrears Recovery (CRAR), landlords in England and Wales have a clear legal pathway to recover rent arrears from non-paying commercial tenants.
At Shergroup, we specialise in the CRAR process and offer a complete enforcement solution backed by our High Court Enforcement Officers and a trusted network of Certificated Enforcement Agents. Read on to understand how CRAR works, who can use it, what rights tenants have, and how to begin the process of recovering unpaid commercial rent swiftly and lawfully.
What Is Commercial Rent Arrears Recovery (CRAR)?
Commercial Rent Arrears Recovery, or CRAR, is a statutory enforcement process introduced under the Tribunals, Courts and Enforcement Act 2007, which came into force on 6 April 2014. It allows landlords of commercial premises to recover unpaid rent by taking control of a tenant’s goods and selling them at public auction to cover the arrears.
Unlike older common law remedies such as distraint, CRAR is strictly regulated, with detailed procedures that must be followed to the letter. It only applies to written commercial leases and can’t be contracted out of or modified.
When Can Landlords Use CRAR?
To use the CRAR procedure, the following conditions must be met |
- The property must be purely commercial – CRAR cannot be used where there’s any residential element, such as a flat above a shop unless a court order is obtained.
- The lease must be in writing.
- The tenant must be in occupation of the premises.
- There must be at least seven days’ worth of net rent outstanding at both the time the Notice of Enforcement is served and at the time of enforcement.
Important: What CRAR Does and Doesn’t Cover
- CRAR only applies to principal rent, VAT on rent, and interest.
- It does not cover service charges, insurance premiums, or other lease-related charges – unless these are expressly defined as “rent” in the lease.
The CRAR Process Step-by-Step
At Shergroup, we follow the CRAR process meticulously to ensure full compliance with the law. Here’s a breakdown of the steps:
1. Instruction to Shergroup
Landlords begin by instructing Shergroup using our online CRAR instruction form or contacting our Enforcement team directly. We will assess eligibility and prepare the necessary documents.
2. Issuing the Notice of Enforcement
We will issue a Notice of Enforcement to the tenant, giving them 7 clear days (excluding Sundays and bank holidays) to pay the arrears. This notice must be delivered by a Certificated Enforcement Agent and contain specific prescribed details.
3. Taking Control of Goods
If the arrears are not paid within the notice period, our Enforcement Agents will attend the property to take control of goods. This is typically done through a Controlled Goods Agreement (CGA), which lists the items secured and allows the tenant to continue using them under a repayment plan.
4. Removal and Sale of Goods
If payment is still not received, or the tenant breaches the repayment terms, the goods may be removed and sold at public auction. The proceeds are used to cover the arrears and enforcement costs.
Using CRAR Against Sub-Tenants
In some cases, landlords may opt to serve notice on a sub-tenant, requiring them to pay rent directly to the superior landlord to cover arrears. This process requires 14 days’ notice, rather than the standard 7 days under CRAR.
Tenant Rights Under CRAR
Tenants facing CRAR enforcement still retain specific rights under law, including:
- Notice: They must receive at least 7 clear days’ notice before any goods are seized.
- Controlled Goods Agreement: Tenants can avoid the immediate removal of goods by agreeing to a CGA and repaying over time.
- Inventory & Valuation: An enforcement agent must provide an inventory of any goods seized and ensure they are professionally valued.
- 7-Day Rule: Once goods are removed, they must not be sold for at least 7 days, allowing tenants a final opportunity to pay and recover their possessions.
Tenants also have the right to apply to the court to set aside the enforcement or delay its execution, especially in cases involving insolvency or hardship.
CRAR and Expired Leases
CRAR may still be used even after a lease ends, provided:
- The lease ended within the last 6 months
- The lease ended without forfeiture
- The rent arrears were due before the lease expired
- The tenant still has goods on the premises
- The landlord retained an immediate right of reversion
CRAR vs Forfeiture: What’s the Difference?
While CRAR allows for rent recovery without terminating the lease, forfeiture ends the lease and regains possession of the premises. During the Coronavirus pandemic, CRAR remained in force, whereas forfeiture was restricted by emergency legislation.
This made CRAR an essential tool for landlords during lockdowns and periods of financial uncertainty.
Why Use Shergroup for CRAR?
Shergroup is one of the UK’s leading enforcement providers. Our team of High Court Enforcement Officers and Certificated Enforcement Agents are highly trained, experienced, and committed to delivering fast, lawful results.
With Shergroup, you benefit from |
A fully compliant CRAR process
Fast and effective action to recover rent arrears
Fixed fee options and clear pricing
Nationwide coverage
Transparent reporting and updates
Eviction from Commercial Premises
If you wish to take full possession of your commercial property, CRAR may not be enough on its own. In such cases, you may need to pursue commercial eviction through forfeiture of lease. Shergroup can help here too, offering a seamless eviction process that complements our CRAR services.
Frequently Asked Questions (FAQs)
Q. What does CRAR stand for?
A. CRAR stands for Commercial Rent Arrears Recovery – a legal process enabling landlords to seize tenant goods to recover unpaid rent.
Q. Can CRAR be used on mixed-use properties?
A. No. CRAR is strictly for commercial premises. Mixed-use properties with residential elements require a court order.
Q. How much rent must be owed before CRAR can be used?
A. There must be at least 7 days’ worth of principal rent overdue at the time of both serving notice and taking enforcement action.
Q. What goods can be seized under CRAR?
A. Items used for business, such as stock and equipment, may be seized. However, essential tools of the trade (up to £1,350) and personal belongings are exempt.
Q. Can CRAR be used if the lease has ended?
Yes, under strict conditions – such as the lease ending within 6 months, and not by forfeiture. The tenant must also still have goods on-site.
Q. Can tenants stop CRAR action?
A. Tenants may repay the arrears, enter a Controlled Goods Agreement, or apply to court to stop or delay the process.
Q. What is the difference between a bailiff and a Certificated Enforcement Agent?
A. Only Certificated Enforcement Agents can carry out CRAR. They are authorised under the Taking Control of Goods Regulations 2013 and must hold a certificate from the County Court.
Start the CRAR Process with Shergroup Today
If your commercial tenant has fallen into arrears, don’t delay. The sooner you act, the better your chances of recovering the rent owed. At Shergroup, we take the stress out of enforcement by managing every step of the CRAR process on your behalf – lawfully, quickly, and professionally.
Contact us today to instruct Shergroup or call our friendly team for a confidential consultation on how we can support you in recovering commercial rent arrears.
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