Call Us TODAY on 020 3588 4240

CRAR | The COVID Lowdown | Commercial Rent Arrears

Worth Sharing?

Get Access to the Best Content on High Court Enforcement

From our heritage as Sheriffs we have developed our property services for the benefit of our community so they have a one-stop shop of protection.

We know that many commercial landlords are looking for ways to keep tenants in situ. In June the UK Government published a Code of Practice for commercial property practices – see https://bit.ly/38rsrji.

 

What is CRAR?

CRAR – Commercial Rent Arrears Recovery – replaces the old Common Law remedy of distress for rent.

 

The Government’s involvement in these contractual commercial relationships is perhaps surprising obvious – as we emerge from the peak of the pandemic, we must protect the economy from the aftershocks of 3 months of lockdown. Keeping tenants trading, and rents being paid is all part of protecting people’s jobs and livelihoods in the weeks and months ahead.

 

COVID Legislation – Commercial Rent Arrears Recovery procedure

 

Under the COVID legislation introduced by the Government to achieve this aim, commercial rent has to be in arrears for 189 days before a landlord can start a Commercial Rent Arrears Recovery procedure CRAR for short.

 

So, the question came in from our client community as to how to calculate the 189 days and we thought we would share our research to clarify the process.

 

The starting point is that many commercial leases, commercial property leases provide for rent recovery to be paid on the traditional “quarter day” system which has come down through history to be the following:

  • 25 March – Lady Day – The Feast of the Annunciation

  • 24 June – Midsummer Day – The Feast of St John the Baptist

  • 29 September – Michaelmas – The Feast of St Michael and All Angels

  • 25 December – The Feast of the Nativity

New leases in England and Wales may use more up-to-date quarter days such as 1st January 1st April 1st July and 1st October. Either way, a landlord needs to check the terms of the lease if the rent is paid in advance or if the rent due on the quarter-day is payable in arrears.

 

Most commercial leases contain a requirement for the tenant to pay the annual rent by equal quarterly payments in advance under the Quarter Day system. During the lease term, the rent payments fall due on the quarter day itself and the entire sum for the quarter is due by or on that date. This means that in normal times a commercial landlord only has to wait 7 days before starting the commercial rent arrears recovery or CRAR process. However, under emergency legislation, that period has been increased to 189 days.

 

The impact of this is obvious. The time in which a CRAR Notice can be served will be stretched to over 2 quarters of rent. So rent due on the June quarter day cannot be enforced by CRAR until the September and December quarter days have passed – just count forward 190 days to get you the date on your calendar when you can enforce.

 

A point worth noting is whether the rent is payable in advance or in arrears and to calculate the 189-day period on a calendar. Once the 189 periods has cleared either way a landlord can go ahead and serve a Notice of Enforcement under the commercial rent arrears recovery legislation and CRAR Regulations.

 

If a commercial landlord finds this all too longwinded then the path to issue a claim for the outstanding rent, along with all the other costs such as service charges, insurance premiums, shared services, can all be added into a county court claim. The point here is that the landlord is not restricted to just the pure any win no fee rent arrears collection but can include all the other charges payable by the tenant as per the lease.

 

Landlord and Letter Before Action

 

A landlord must observe the Pre-Action Debt Protocol when sending a Letter Before Action prior to a claim being issued. This may mean giving a sole trader commercial tenant 30 days in which to respond to the Letter before a claim can be issued. This won’t apply to a trading partner or company, and a claim can be issued in as little as 7 days of a suitable Letter being sent.

 

A claim can follow, and if there is no response, then judgment can be entered in as little as 19 days. After that judgment can be enforced using a Writ of Control with enforcement agents attending (as if under a CRAR) to compel payment.

 

Shergroup enforcement agents are chosen for their skills in interacting with the public. By taking legal control of goods at a commercial address, they become a catalyst for an outcome. The aim of the course is to collect payment in full without leaving the tenant in a difficult place. It may also mean a payment plan which up until our arrival on site, may not have been “on the table”.

 

Can you force entry into commercial premises?

Yes, we can but we like to have written instructions from our client confirming they want our Enforcement Agents to take this step.

 

How do I recover rent arrears from commercial tenants who have a licence?

To recover rent arrears from commercial tenants under a licence you will need to issue a county court claim and then enter judgment. We can assist you with this entire process. Here’s a link to upload your information

 

Can you seize my commercial tenant’s assets at other locations to pay rent arrears?

If you want to go for the shorter CRAR procedure, then we can only enforce at the address on the lease. But a county court judgment gives us the flexibility to enforce at any address of the commercial tenant’s business where goods are located. To start the ball rolling please fill in our short enquiry form using this link

 

What can the Landlord seize to cover commercial rent arrears?

As with all enforcement action, there are limits to what goods can be taken into legal control. These are set out in the Taking Control of Goods Regulations 2013.

 

Shergroup service solutions offer a complete one-stop-shop for this entire process – so a commercial landlord can go from Letter Before Claim to Claim to Judgment and then on to Writ using one experienced Business Solutions Advisor.

 

These services are also offered in segments so if you have a solicitor to handle the legal aspects of recovery but needs assistance on the enforcement side of things. That’s fine – we can help on as little or as much as is needed.

 

So if you are interested in moving forward on any element of this process please call us on 0845 890 9200 or live chat on our website at www.shergroup.com.

You Might Also Like

Content Writer​

DISCLAIMER NOTICE |

The following disclaimer applies to Shergroup Limited and its platform, shergroup.com. Please read this notice carefully before accessing or using any information provided on our platform.

  1. No Legal Advice | The information presented on shergroup.com, including but not limited to articles, blog posts, FAQs, and other resources, is provided for general informational purposes only. It is not intended to be, and should not be considered, legal advice. The information provided does not create a solicitor/client relationship between Shergroup Limited and the user.
  2. Not a Substitute for Legal Advice | The information on shergroup.com should not be relied upon as a substitute for obtaining legal advice from a qualified professional. The application of laws and regulations can vary based on specific circumstances, and legal advice tailored to your particular situation is crucial. Therefore, we may refer you to a member of our partner firm -Shergroup Legal – on legal matters or encourage you to take your own legal advice from your preferred advisor.
  3. No Guarantee of Accuracy | While we strive to provide accurate and up-to-date information, Shergroup Limited does not guarantee the accuracy, completeness, or reliability of any information on shergroup.com. The legal landscape is constantly evolving, and laws may vary across jurisdictions. Therefore, any reliance you place on the information provided is at your own risk.
  4. No Liability | Shergroup Limited, including its officers, employees, agents, and affiliates, shall not be held liable for any direct, indirect, incidental, consequential, or punitive damages arising out of your access to or use of shergroup.com or any information contained therein. This includes, but is not limited to, any errors or omissions in the content, or any actions taken or not taken based on the information provided.
  5. Third-Party Links | Shergroup.com may contain links to third-party websites or resources. These links are provided solely for convenience and do not imply endorsement or responsibility for the content, accuracy, or legality of such websites or resources. Shergroup Limited shall not be liable for any damages or losses incurred as a result of accessing or using any third-party websites or resources.
  6. Changes to Disclaimer | Shergroup Limited reserves the right to modify or amend this disclaimer notice at any time without prior notice. Any changes will be effective immediately upon posting on shergroup.com. It is your responsibility to review this notice periodically for updates.

By accessing or using shergroup.com, you acknowledge that you have read, understood, and agreed to this disclaimer notice. If you do not agree with any part of this notice, you should refrain from accessing or using shergroup.com.

Last updated | 19 July 2023

Should you have any questions or concerns regarding this disclaimer notice, please contact us at [email protected]