The Government announced yesterday that the ban on the eviction of commercial tenants will last until the end of March 2021.
The announcement follows a series of measures introduced by the Government to protect businesses from losing their commercial premises due to the impact of COVID-19
On the one hand, this must be right. Businesses deserve the breathing space to recover from a crisis that was not of their making, has emerged unexpectedly, and has severely impacted their trading. As a business engaged in rent and debt collection across various sectors, we intimately understand the hardships eviction can impose in any situation.We don’t even like the word!
That said, in our business life, there are always three aspects of our operations. The situation of the debtor is one and we empathize with that as we are a business ourselves. Then there is our duty to the Court as High Court Enforcement Officers. We take this responsibility seriously and follow Government Regulations to ensure safe and proportionate enforcement. Thirdly there is the need to help and support our customers, who are the landlords who use the lawful and correct steps to protect their businesses from bad debt, and sometimes bad tenants.
Bigger interests are at play here. The protection of the economy follows closely behind the protection of public health and the Government has an unenviable task in trying to safeguard both aspects of our national life.
Landlords like other citizens must play their part in the protection of these interests and many are doing that at great cost to themselves. Whilst a mega-landlord such as an institution may well have the cash to ride out the storm, not all landlords are “Goliaths” of the business world. Many are small-time investors who rely on the commercial rent from property to finance a pension, or to top up other sources of income.
So, whilst the world of landlords looks gloomy, we think it important to highlight the options still available to landlords despite the announced extension. Claimants and debtors can flex the law to meet their needs.
So, what is available to landlords in both commercial and residential settings? Here are our top picks to get landlords through the current crisis |
1. MEDIATION |
We have just set up a mediation service to support landlords and other claimants who need to resolve a dispute but who don’t want to encounter the risks of going to Court and incurring unknown legal fees, either with their own lawyers and or for the other side. Litigation as you know is a risky business! The Government itself supports and encourages the mediation process and we do as well. Being a natural fit in our group of solutions for cash flow and property, it reduces the risk of enforcement and eviction. It won’t work for everyone but getting an agreement on how to move forward it going to be the best and most cost-effective way out of a situation where eviction is off the table – and in any event, eviction takes neither party forward in the current climate
2. GET A CCJ FOR THE MONEY OWED |
If you have obtained these old CCJs and Orders within 6 years, you can issue a Writ of Control or take some other form of enforcement action without needing to seek permission from the Court. For many commercial landlords, CRAR is currently offline unless the rent exceeds 366 days old (from 25th December 2020) and they have received payment up until the December quarter day in 2019. So instead of doing nothing – we suggest issuing a money claim for the amount of the rent, and other sums due under the lease, and entering judgment for that amount. With a CCJ in place, a landlord has more “cards in the hand” to play.
A landlord might encourage the tenant to pay within the one month after judgment to avoid getting a CCJ registration for 6 years on the tenant’s credit file. Whilst it’s still tough on a tenant to be the target of a money claim, it’s not as tough as trying to evict a tenant or and in the future. Landlords have the option to enforce judgments for 6 years without seeking further permission from the Court. This grants them the ability to utilize the usual enforcement remedies, including a Writ of Control, Charging Order, Third-Party Debt Order, and even Attachment of Earnings (for directors on salaries in their tenant businesses). There can be no criticism against a landlord taking a route to achieve a judgment and then enforcing it – admittedly with flexibility and empathy for good tenants.
3. CHECK THE COMMERCIAL LEASE FOR OTHER OBLIGATIONS |
We are seeing landlords still serving Section 146 Notices for breaches (other than rent) as they protect their position to remove tenants using Forfeiture clauses. Undoubtedly, landlords have engaged in serious thinking before deciding to forfeit a commercial tenant, demonstrating their careful consideration in taking such action. Good tenants and even tenants with an appetite to have a commercial lease are going to be harder to find in 2021 and beyond. What this pandemic has shown is that businesses can work in cheaper and less obvious locations. The need for commercial rental space is going to change. For the moment however forfeiture for breach of lease obligations not connected to non-payment of rent is a way for a landlord to bring a relationship to an end but the spectre of empty property looms so it is not without consequences.
4. TRANSFER JUDGMENTS AND ORDERS TO THE HIGH COURT |
You could say we would say this – and you’d be right. We pioneered the transfer process for both Writs of Control and Writs of Possession, and we feel very confident in saying that both do an awful lot of good for landlords. While the moratorium is in place, we encourage landlords to assess the rent and other charges owed to them and position themselves to have a High Court Writ ready for enforcement when needed.
For money judgments, this is relatively straight forward. Claim the issue, enter the judgment after 19 days, and apply for the Certificate of Judgment on N293A to enable the issuance of a Writ of Control in the short, medium, or longer term. Using the time to get into a stronger position.
The moratorium provides landlords with the opportunity to actively issue possession claims by using the suggested wording. |
“AND the claimant intends to make an application for leave to have the matter transferred to the High Court pursuant to section 42 of the County Courts Act 1984 for enforcement”
To expedite enforcement for possession orders amid the backlog, landlords are encouraged to apply for High Court enforcement. Act now to avoid delays.
5. FORMER TENANT RENT ARREARS |
If these were writt0en off in the past, or CCJs or Orders obtained which were not enforced, then we encourage landlords to dig them out of their filing systems and dust them down. The hard work is done. If you obtained CCJs and Orders within 6 years, you can enforce them without court permission. Use a Writ of Control or other enforcement actions.
The eviction ban has limited landlords’ options to recover rent and property, impacting them after a year in a COVID world. However, there are remaining remedies that protect landlords’ positions, applicable to both commercial and residential cases. Although not as simple as CRAR or Forfeiture actions, these remedies can support landlords in navigating the start of the New Year. Get the right assistance for your business with Shergroup.
Shergroup offers a free review service of any judgment or order that a landlord would like us to check before taking action. We also offer a full claim to judgment service through our related legal brand. If you need support please contact us at www.shergroup.com or on any of our public-facing channels.