The landlords and letting agents in the UK can make use of the common law right to distress. Under this law, a landlord can instruct a bailiff to enter the debtor’s property to seize goods as security for payment of the debt.
The Tribunals Courts and Enforcement Act 2007 (TCE Act) removed Distress for Rent on April 6, 2014, and replaced it with a new Commercial Rent Arrears Recovery framework (CRAR).
The Tribunals Courts and Enforcement Act 2007, which provides clarity, simplification, and uniformity of the law, is destined to revolutionise the enforcement sector. It establishes a single, graduated charge structure and requires all enforcement agents to be certified and competent.
The statutory instrument permitting the implementation of Part 3 of the TCE Act was released on July 15, 2013, after years of preparation, and provided for Part 3 of the Act to enter into force, resulting in:
- The landlord’s
- the common law right to levy on goods has been abolished
- Recovery of insurance and services is no longer allowed
- Distress without notice is no longer available
- Complicated fee scales & structures have been removed
- Pound breach has disappeared
- Landlord and Tenant Act 1904 no longer applies
The landlord’s right to charge on goods, as well as the traditional process and case law of rent distraint, is eliminated under Section 71 of the TCE Act.
Abolition of reserved rent to ancillary services, which restricts the use of CRAR for utilities, rates, insurance, legal fees, and other costs, as well as Section 85, which prevents any attempts to circumvent the restrictions through secondary contractual agreements.
The Rights of Landlord Under Common Law Remedy of Distress |
A business landlord may distrain (seize) commodities present on the premises and either hold them until the commercial rent arrears are cleared or sell them to offset the arrears under the common law remedy of distress for rent. As his agent, the landlord would usually engage a certificated bailiff to distrain on his behalf. Only when there is a lease in place and the rent is in arrears under the provisions of the lease may the landlord distrain.
Any item on the premises can be confiscated to pay the debt, according to common law. Some commodities, however, have been exempted by statute, a practice known as privilege.
Some goods are protected by absolute privilege and cannot be confiscated under any circumstances. There are some objects with special privileges that can only be used if there are no other options for paying off the debt. Finally, some goods have no privileges attached to them.
Absolute privilege
These items are completely exempt from seizure:
- Perishable items
- Things in actual use (including clothes being worn)
- Household goods
- Tools of the trade
- Goods held on commercial premises as a direct part of the tenant’s business, for example, items left for repair, goods held on sale or return
- Goods on hire purchase
- Hired and leased items, as they belong to a third party
- A third party’s goods, e.g. sub tenants’ and other unconnected third parties’ goods
Qualified privilege
If the landlord has not attained the required value after seizing all other assets and there appears to be nothing further available for seizure at the premises, he may remove eligible items. Because he may be sued if he didn’t feel there was nothing else available, the landlord must believe there was nothing else available.
Qualified privilege mostly involves trade tools that aren’t already protected by absolute privilege.
No privilege
- Goods which are specifically excluded from protection are:
- Goods belonging to the tenant’s spouse or partner
- Goods lent to the tenant on permanent load with no conditions attached
- Goods belonging to the tenant’s business partner
- Goods in the possession in any bill of sale or hire purchase agreement (except those subject to a default notice served in the Consumer Credit Act 1974)
Summing-up
Use Shergroup’s Commercial Rent Arrears Recovery solutions to recover your outstanding rent. To use our service you can visit our website and check out our CRAR solution here | https://shergroup.com/property-solutions/commercial-rent-arrears-recovery-instruction-free/
This solution can only be used by landlords and their advisors and it only applies to commercial tenancies subject to a written lease. To get started on this service all you need to do is
- Upload any outstanding commercial rent invoices you want to enforce – we don’t want any original paperwork at this stage – so please don’t try to send us any!
- Provide a copy of any Notice of Enforcement you have already sent (if you haven’t sent a Notice of Enforcement) we will take care of this for you Send us any other paperwork you want us to add to your instruction Fill in your full details including your name, email and contact number
You can also use our FREE Review service to check where you stand with your CRAR instructions.
https://shergroup.com/landing-page-commercial-rent-arrears-recovery/
If you need further assistance you can speak with our business solutions advisors.
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