Frequently Asked Questions

Yes, bailiffs (now referred to as enforcement agents) can still be instructed to collect commercial rent arrears, but this must be done under the framework of the Commercial Rent Arrears Recovery (CRAR) process, which replaced the old “distress for rent” laws on April 6, 2014.

Key Points About Bailiffs and CRAR:

1. Certified Enforcement Agents Only: Only certified enforcement agents can carry out CRAR. This certification ensures they are qualified and adhere to strict regulations.

2. Eligible Debts: CRAR applies solely to pure rent arrears owed under a written commercial lease. This excludes service charges, insurance, or other associated costs unless explicitly defined as “rent” in the lease agreement.

3. Notice Requirement:

1. • Landlords must serve at least seven clear days’ notice (excluding Sundays and Bank Holidays) before enforcement agents can take control of goods.
   • Minimum Rent Arrears: There must be at least 7 days’ worth of unpaid rent before CRAR can be used.
   • Taking Control of Goods: Enforcement agents may seize goods belonging to the tenant to sell and recover the outstanding rent. However, this must follow a structured process to avoid breaches of regulations.

Exceptions and Restrictions:

• Residential Properties: CRAR cannot be used for residential properties or mixed-use premises where the commercial and residential areas are not separately demised.
• Subtenants: If a subtenant is in place, landlords may serve a notice requiring the subtenant to pay rent directly to them instead of the tenant in arrears.

If you’re considering instructing enforcement agents for commercial rent arrears, ensure the process complies with CRAR to avoid legal challenges.

No, levying distress is no longer carried out under the Commercial Rent Arrears Recovery (CRAR) regulations, which replaced the old “distress for rent” process on April 6, 2014. Instead, a new, regulated procedure has been introduced for recovering commercial rent arrears.

Key Differences Between Distress and CRAR:

1. Levying Distress:

• Under the old law, certificated bailiffs could seize goods from a tenant without prior notice and sell them to recover unpaid rent.
• It was a landlord’s common law right and could be applied broadly with fewer procedural safeguards.

2. CRAR Process:
Under CRAR, enforcement agents (formerly certificated bailiffs) follow a statutory process with strict requirements:

• Written Notice: Landlords must serve at least seven clear days’ notice (excluding weekends and Bank Holidays) before enforcement agents can take control of goods.
• Certification: Only certified enforcement agents can perform CRAR actions, ensuring professional standards and compliance.
• Scope: CRAR applies only to pure rent arrears for a commercial property under a written lease. Other charges like service charges, insurance, or utility costs cannot be recovered unless explicitly defined as “rent” in the lease.

3. Taking Control of Goods:

• Under CRAR, enforcement agents take control of goods using a formal controlled goods agreement or removal of goods for sale, following strict procedures laid out in the Tribunals, Courts and Enforcement Act 2007.

Summary:

While certificated bailiffs used to levy distress under the old laws, CRAR now provides a more regulated and transparent process for recovering commercial rent arrears. The older “distress” approach is no longer lawful, and enforcement actions must adhere to CRAR rules.

No, under the Commercial Rent Arrears Recovery (CRAR) regulations, landlords are not permitted to take control of goods themselves. The process of taking control of goods to recover unpaid commercial rent must be carried out by certified enforcement agents (formerly known as certificated bailiffs).

Why Landlords Cannot Take Control of Goods:

1. Regulation and Certification:

• • CRAR mandates that only certified enforcement agents can take control of goods. These agents must follow a regulated process and comply with strict rules, ensuring fairness and professionalism.
  • Landlords lack the legal authority and certification required to carry out this function themselves.

2. Notice Requirement:

• • A landlord must issue a seven clear days’ written notice to the tenant before enforcement agents can take control of goods. This ensures tenants are aware and given the opportunity to pay before enforcement occurs.

3. Protection for Tenants:

• • CRAR is designed to create a transparent and fair system for recovering rent arrears, with safeguards in place to prevent abuse. Allowing landlords to take control of goods directly could lead to conflicts and potential breaches of these protections.

4. Legal Risks for Landlords:

• • If a landlord were to take control of goods themselves, it could be considered unlawful, exposing them to legal action from the tenant.

What Landlords Can Do:

Landlords must engage certified enforcement agents to handle the process under CRAR. These agents will:

• Serve the required notice.
• Take control of goods (if necessary).
• Follow statutory procedures to sell the goods and recover rent arrears.

If a landlord wishes to recover arrears outside the CRAR framework, they may need to explore other legal remedies, such as court proceedings.

No, a certificated enforcement agent cannot immediately attend the premises to collect outstanding rent after completing a Warrant of Control under the Commercial Rent Arrears Recovery (CRAR) process. CRAR requires a specific procedure to be followed, including a mandatory notice period before enforcement action can take place.

Key Steps and Timing Requirements:

1. Issuance of the Notice of Enforcement:

• • After obtaining a Warrant of Control, the enforcement agent must serve a Notice of Enforcement on the tenant.
  • This notice must give the tenant at least seven clear days to pay the outstanding rent before the enforcement agent can attend the premises.
  • “Clear days” exclude Sundays, Bank Holidays, and the date the notice is served.

2. Purpose of the Notice Period:

• • The notice period provides the tenant with an opportunity to settle the debt before further enforcement action is taken.
  • This step is legally required and cannot be skipped under CRAR regulations.

3. Attending the Premises:

• • Once the notice period has expired, the enforcement agent may attend the tenant’s premises to take control of goods if the debt remains unpaid.

Exceptions to Immediate Action:

There are no provisions under CRAR that allow enforcement agents to bypass the notice period, even in urgent situations. Attempting to enforce without adhering to the notice requirements would be unlawful and could result in legal challenges or penalties.

Summary:

After completing the Warrant of Control, the certificated enforcement agent must serve a Notice of Enforcement and wait the legally required seven clear days before attending the premises to collect outstanding rent. This ensures compliance with the CRAR process and protects both the landlord and tenant’s rights.

A landlord can benefit significantly from a certificated enforcement agent taking control of goods under the Commercial Rent Arrears Recovery (CRAR) process. This regulated method ensures professionalism and compliance with the law while providing landlords with an effective way to recover commercial rent arrears.

Benefits of Using a Certificated Enforcement Agent:

1. Facilitates Rent Recovery

• Enforcement agents can seize and sell tenant goods to recover unpaid rent, creating a direct path for landlords to regain owed money.
• The mere presence of an enforcement agent can often encourage tenants to settle arrears quickly to avoid losing their assets.

2. Legal Compliance

• Certificated enforcement agents ensure that all actions are carried out within the framework of CRAR, protecting landlords from potential legal disputes.
• They handle mandatory steps such as serving the Notice of Enforcement and documenting their actions, ensuring due process.

3. Reduces Landlord’s Burden

• Landlords avoid the stress, time, and effort involved in directly handling arrears disputes. Enforcement agents are skilled in negotiation and conflict resolution, making them well-equipped to manage these situations.

4. Cost-Effective Recovery

• Enforcement fees are typically recoverable from the tenant under CRAR, meaning the landlord does not usually bear these costs directly.
• If goods are seized and sold, the proceeds can be applied to outstanding rent, fees, and expenses, reducing the landlord’s financial loss.

5. Preserves Business Relationships

• Using an enforcement agent provides a degree of separation between the landlord and tenant, which can help maintain a professional relationship.
• This is particularly valuable when the landlord wishes to retain the tenant after the issue is resolved.

6. Enforcement Options for Non-Payment

• If tenants fail to pay during the notice period, enforcement agents can escalate to taking control of goods. This can include:
  • Listing goods under a Controlled Goods Agreement, where tenants agree not to dispose of assets while continuing to pay rent.
  • Physically removing goods for sale if debts remain unpaid.

7. Encourages Compliance

• The potential of losing valuable goods often motivates tenants to clear arrears promptly.
• Controlled goods agreements can also incentivize tenants to stay current with future rent payments.

Example:

A tenant owes £5,000 in rent and has ignored prior reminders. The enforcement agent serves a Notice of Enforcement, giving the tenant seven clear days to pay. When the tenant still does not pay, the agent visits the premises and identifies goods worth £8,000.

• The tenant is presented with a Controlled Goods Agreement and agrees to a repayment plan.
• If the tenant defaults, the agent can seize and sell the goods, with proceeds applied to the arrears and enforcement fees.

Conclusion:

Using a certificated enforcement agent under CRAR ensures a structured, lawful, and effective approach to recovering unpaid commercial rent. It minimizes risks for landlords, enforces tenant accountability, and often achieves quicker resolutions than alternative legal processes.

If your tenant’s rent is overdue, as a landlord or managing agent, there are structured steps you can take to recover your rent arrears while remaining compliant with the law. Here’s a detailed guide to help you through the process:

1. Review the Lease Agreement

• Check the Terms: Ensure that the lease agreement includes clear provisions about rent due dates, penalties for late payments, and the remedies available for non-payment.
• Clarify Outstanding Amounts: Verify the exact amount of arrears, including rent, interest, or any late fees specified in the agreement.

2. Communicate with the Tenant

• Send a Reminder: Start with a polite rent reminder or overdue notice. Sometimes tenants may have overlooked payment deadlines.
• Discuss the Situation: If the tenant is facing financial difficulties, open communication may help you agree on a repayment plan or resolution that avoids escalation.

3. Issue a Formal Demand

If initial communication fails:

• Serve a Rent Demand Letter: Send a formal written demand for payment. This document should:
  • State the amount owed.
  • Reference the lease agreement.
  • Set a deadline for payment.

This step demonstrates that you’re serious about recovering the arrears and provides evidence if legal action becomes necessary.

4. Consider Using CRAR (Commercial Rent Arrears Recovery)

If your tenant occupies a commercial property and rent remains unpaid:

• Engage a Certified Enforcement Agent: CRAR allows you to recover rent arrears using enforcement agents to take control of goods.
• Legal Requirements for CRAR:
  • The rent arrears must be at least 7 days overdue.
  • A Notice of Enforcement must be served, giving the tenant 7 clear days to settle the debt.
  • CRAR applies only to pure rent arrears (not service charges or insurance).

5. Explore Alternative Legal Options

If CRAR is not suitable or the tenant does not comply:

• County Court Claims: You can file a claim to recover rent arrears. If successful, the court may issue a judgment requiring the tenant to pay.
• Forfeiture of Lease: As a last resort, consider terminating the lease if the agreement allows for forfeiture due to non-payment of rent. This can involve:
  • Peacefully re-entering the property.
  • Serving a Section 146 Notice (if the lease requires).

6. Check for Subtenants

If the tenant has subtenants, you can use CRAR to redirect rent payments directly to you. This is known as serving a notice of rent diversion.

7. Act Promptly

Rent arrears can accumulate quickly, and delayed action can make recovery more challenging. The sooner you start the process, the better your chances of recovering the full amount.

8. Seek Professional Advice

If you’re unsure of the best course of action:

• Consult Legal Experts: Ensure compliance with lease terms and relevant laws.
• Engage Property Management Specialists: They can handle arrears recovery on your behalf.

9. Document Everything

Keep detailed records of:

• Communication with the tenant.
• Notices or demands sent.
• Payments received.

This documentation will be crucial if the dispute escalates to legal proceedings.

10. Avoid Retaliatory Action

Do not attempt to seize goods or restrict access to the property without following the proper legal channels, as this can expose you to liability.

Summary of Actions:

RENT ARREARS? YES! Act today! Instruct 24/7 enforcement

Stages of Commercial Rent Arrears Recovery (CRAR)

Compliance Stage

The Compliance Stage begins with the issuance of a 7-clear-day enforcement notice, which may be delivered by hand, post, or electronically via email.

• Cost to Tenant: £75.00 + VAT
• Cost to Client: No Charge

If the tenant pays the full outstanding amount within the 7-day period directly to 24/7 Enforcement Ltd., the case is closed, and the collected funds are promptly remitted to the landlord or managing agent.

At 24/7 Enforcement Ltd., we provide a completely free service to our clients when instructed under the CRAR process.

During this stage, tenants often contact us to confirm payment arrangements or seek to establish a plan for clearing arrears. The statutory fee of £75.00 + VAT is reasonable and is rarely contested by tenants, as it arises from their own late payment of rent.

Enforcement Stage

If the tenant fails to pay in full, partially pays without prior agreement, or does not respond by the end of the 7-day compliance period, the account progresses to the Enforcement Stage.

At this point, certified enforcement agents are authorized to attend the premises to take control of goods.

• Recommended Action: We advise landlords to authorize enforcement action on the 8th day for cases of unpaid rent.

• On-Site Process:

  • The enforcement agent will attempt to take control of goods at the premises.
  • If payment is still not made, goods may be removed for sale in compliance with legal procedures.

• Costs to Tenant (set out under CRAR regulations):

  • For rent arrears between £0.01 – £1,500.00: £235.00
  • For arrears above £1,500.01: £235.00 + 7.5% of the outstanding amount over £1,500.01
  • All costs are subject to VAT.

• Cost to Client: No Charge

This stage provides landlords with a significant advantage, as the ability to seize and sell goods encourages many tenants to resolve their arrears quickly.

Sale Stage

If payment is not made after goods are taken into control—whether at the time of enforcement or following a default on an agreed payment plan—the matter progresses to the Sale Stage.

Process:

1. A Notice of Intention to Re-Enter Premises is issued, providing the tenant with 48 hours to clear the arrears in full. This notice can be delivered by hand, email, or post.
2. If the tenant fails to comply, goods may be removed for sale to recover the outstanding rent and costs.

Costs to Tenant:

• Sale Stage Fee: £110.00 + VAT
• For arrears exceeding £1,000.00: 7.5% additional fee + VAT
• Additional costs include:
  • Storage fees.
  • Disbursement expenses (e.g., advertising goods for sale).
  • Auctioneer fees and commissions.

Landlord Protections:

If the sale of goods results in insufficient funds to cover fees (e.g., storage, auction costs, or disbursements), 24/7 Enforcement Ltd. will:

• Write off the statutory sale fee, ensuring the landlord incurs no additional costs from 24/7 Enforcement Ltd.
• Assist landlords in managing any shortfall transparently.

Client Responsibility and Potential Exposure

The only scenario where costs may be incurred by the landlord is if the tenant makes a direct payment to the landlord or managing agent without notifying 24/7 Enforcement Ltd.. This action effectively leaves no rent arrears to enforce against, and the instructing client becomes responsible for any fees incurred under the Tribunals, Courts, and Enforcement Act 2007.

If third-party contractors are needed at the Sale Stage for goods removal or auction, 24/7 Enforcement Ltd. will discuss these costs with the landlord in advance and obtain approval before proceeding.

Why Choose 24/7 Enforcement Ltd.?

• Free Service for Clients: We offer a no-cost solution to landlords and managing agents under the CRAR process.
• Transparent Costs to Tenants: All statutory fees are applied reasonably and in accordance with the law.
• Support at Every Stage: From compliance to sale, our certificated enforcement agents are skilled in maximizing results while ensuring legal compliance.
• Client-Centric Approach: We protect landlords from unexpected costs and provide clear communication throughout the process.

For more information or to instruct us, contact 24/7 Enforcement Ltd. at:
Address: 3rd Floor, 86-90 Paul Street, London, EC2A 4NE
Phone: 0800 6129 247
Email: info@247-enforcement.co.uk

No, the 7 clear days required at the Notice of Enforcement stage under the Commercial Rent Arrears Recovery (CRAR) process cannot be reduced by the landlord or enforcement agent. This time frame is a statutory requirement under the Tribunals, Courts and Enforcement Act 2007 and must be strictly adhered to.

Key Points:

1. Mandatory Notice Period:

   • The Notice of Enforcement must give the tenant 7 clear days to settle the arrears before any enforcement action can begin.
   • “Clear days” means that weekends, Bank Holidays, and the day the notice is served are excluded from the count.

2. Purpose of the Notice Period:

   • To provide tenants with a fair opportunity to pay the arrears or make arrangements before further enforcement action is taken.
   • It ensures compliance with the principles of due process and fairness.

3. Non-Negotiable Period:

   • The 7-clear-day period is legally binding and cannot be shortened, even by mutual agreement between the landlord and the enforcement agent.
   • Breaching this requirement would render any subsequent enforcement actions unlawful and open to legal challenge.

4. Exceptions:

   • The only instance where the 7-day notice might not apply is in urgent court-approved circumstances, such as an application for an Order for Immediate Enforcement. This is rare and must be granted by a court based on compelling evidence (e.g., risk of goods being removed or disposed of by the tenant).

Summary:

The 7 clear days at the Notice of Enforcement stage are a statutory obligation that cannot be altered or waived by the landlord or enforcement agent. Any attempt to proceed before this period expires would breach CRAR regulations and jeopardize the enforcement process.

Outstanding service charges and insurance can be recovered free of charge when provided under a dual instruction. This involves:

1. A Warrant of Control for recovering pure commercial rent under CRAR.
2. A separate instruction to recover service charges and insurance.

The recovery of service charges and insurance is handled by our debt recovery division. This process begins with a 7-day debt recovery letter issued to the tenant, running concurrently with the 7-day Enforcement Notice for the collection of outstanding commercial rent under CRAR.

Why This Dual Approach Works:

• The simultaneous handling of both matters proves highly effective, as communication with the tenant during the 7-day notice period often leads to resolution without the need for premises attendance.
• Communication channels typically include email, written correspondence, and telephone discussions, which streamline the process and encourage prompt payment.

Premises Attendance:

• If payment is not made within the notice period, 24/7 Enforcement Ltd. may attend the tenant’s premises to negotiate full payment for both commercial rent, service charges, and insurance.
• This opportunity arises naturally if the tenant defaults on the dual-instructed Warrant of Control.

Cost to the Tenant:

• The statutory legal charges associated with recovering pure commercial rent under CRAR remain chargeable to the tenant, as outlined by CRAR regulations.

By using this approach, landlords and managing agents benefit from a streamlined, cost-effective solution for recovering multiple outstanding amounts in a single process.

Service Charge & Insurance recovery remains a completely free of charge service to our clients.

Our completely free of charge to client and tenant collection service consists of;

1. Administering the account.
2. The issuing of a 7-day letter to the tenant advising them of the Service Charge & Insurance arrears.
3. Communication with the tenant during the 7-day letter period should they contact us to discuss the matter.
4. Telephone calls made to tenant after the expiry of the 7-day letter.
5. All administration and monitoring of any payment arrangements.
6. Payment of any funds from tenant can be made directly into client account if preferred.
7. 100% of any collections received by 24 7 Enforcement Ltd. are remitted directly to client within 24 hours of receipt of the payment from tenant.
8. Weekly/ Monthly case by case progress report issued to client.

What is not included in the free of charge collection service that is provided;

1. Personal doorstep recovery agent’s attendances to tenant’s premises.
2. Face to face meetings with tenants to discuss the arrears.

Best results are obtained when instructed under a dual instruction. i.e. a Warrant of Control for the recovery of the pure Commercial Rent under (CRAR) together with a separate instruction to collect the outstanding Service Charge & Insurance.

24/7 Enforcement Ltd. provides a straightforward and cost-effective debt recovery service with no upfront administration fees for our clients or debtors.

• What We Don’t Charge For:
  • Case setup or loading the debt onto our system.
  • Managing payment arrangements for the debtor.
  • Follow-up calls, correspondence, or issuing letters related to debt management.

Instead of adding fees to the debtor’s balance, 24/7 Enforcement Ltd. deducts a small percentage from the funds successfully recovered. These deductions are reasonable and depend on the original debt value:

• Debt Value: £0.01 – £5,000.00: 15% + VAT
• Debt Value: £5,000.01 – £10,000.00: 8% + VAT
• Debt Value: £10,000.01 and above: 5% + VAT

What Is Not Included in the Free Service?

The following services may incur additional costs and are not included in our standard free-of-charge recovery process:

1. Personal Doorstep Recovery: Visits by recovery agents to the debtor’s premises.
2. Face-to-Face Meetings: In-person discussions with the debtor regarding the arrears.

Why Choose 24/7 Enforcement?

Avoid costly solicitor fees and lengthy court proceedings by instructing 24/7 Enforcement Ltd. to recover your outstanding debts. Our experienced team recovers substantial sums for clients every year, with a proven track record of success—even in cases where other companies have failed.

We approach debt recovery with professionalism, sensitivity, and ethical practices, ensuring the best outcomes for our clients.

Complete our Debt Recovery Instruction Form today and let us work quickly to recover what is owed to you.

Yes, Commercial Rent Arrears Recovery (CRAR) can be used to recover rent from a subtenant, but only under specific circumstances. This is achieved through a process called rent diversion, which allows the landlord to require the subtenant to pay rent directly to them instead of the tenant who is in arrears.

How It Works:

1. Serving a Notice:

   • The landlord must serve a Notice of Rent Diversion to the subtenant under Section 81 of the Tribunals, Courts and Enforcement Act 2007.
   • This notice legally obliges the subtenant to redirect their rent payments to the landlord until the arrears owed by the primary tenant are cleared.

2. Requirements for CRAR with Subtenants:

   • The primary tenant must be in arrears for pure rent (excluding service charges, insurance, or other charges).
   • The landlord can only recover rent already due and payable at the time of the notice.

3. Key Limitations:

   • CRAR can only be used for commercial leases; it does not apply to residential or mixed-use properties.
   • The subtenant cannot be required to pay more than the rent they owe under their sublease agreement.

Benefits of Rent Diversion via CRAR:

• Provides a direct way for landlords to recover arrears when the primary tenant fails to pay.
• Avoids the need for enforcement agents to seize goods from the primary tenant.
• Keeps the property occupied, preserving rental income while resolving the arrears issue.

If you’re considering CRAR for a subtenant, ensure you follow the proper notice procedures to remain compliant with the law. Would you like guidance on drafting a Notice of Rent Diversion or more details about CRAR?

Commercial Rent Arrears Recovery (CRAR) can be used for leases with inclusive rents, but only the portion of the rent attributable to pure rent can be recovered under CRAR. Pure rent refers exclusively to the payment for the occupation of the premises and excludes additional charges such as service charges, insurance, utilities, or maintenance costs, even if these are bundled into an inclusive rent figure.

How CRAR Works with Inclusive Rents:

1. Separating Pure Rent from Inclusive Rent:

   • The landlord must identify and separate the portion of the inclusive rent that constitutes “pure rent” before proceeding with CRAR.
   • This distinction must be clearly stated in the lease agreement. If the lease does not break down the rent components, CRAR cannot be used, as it would be impossible to determine the amount attributable solely to “pure rent.”

2. Eligibility:

   • CRAR applies only to arrears that are strictly rent for the premises.
   • Additional costs (e.g., service charges, insurance, or other ancillary fees) must be recovered through alternative means, such as debt recovery or court action.

3. Adjustments for Ambiguities:

   • If the lease agreement lacks clarity about what portion of the rent is “pure rent,” the landlord may need to seek legal advice or a court ruling to define this amount.

Landlord Actions for Inclusive Rents:

• Clear Lease Agreements: Ensure that the lease agreement explicitly separates “pure rent” from other charges to make the recovery process under CRAR straightforward.
• Alternative Recovery for Other Charges: Use separate recovery methods, such as debt recovery services, for unpaid charges not classified as “pure rent.”

What Happens if Inclusive Rents Are Not Separated?

If the lease agreement does not specify what portion of the rent is for the occupation of the premises, CRAR cannot be applied. Landlords in this situation may need to pursue arrears through a court process or renegotiate the lease to separate the rent components for future clarity.

Commercial Rent Arrears Recovery (CRAR) can be applied to turnover rent, but it depends on how the turnover rent is defined and structured within the lease agreement. CRAR can only recover pure rent—the fixed or variable amount attributable solely to the tenant’s right to occupy the premises. If turnover rent is structured to include non-rent elements (e.g., service charges or percentages tied to business performance), it may limit the use of CRAR.

How CRAR Applies to Turnover Rent:

1. Turnover Rent Structure:

   • Turnover rent is typically calculated as a percentage of the tenant’s revenue or sales.
   • If the lease agreement explicitly defines turnover rent as “rent for occupation of the premises,” it qualifies for recovery under CRAR.
   • Additional charges bundled with turnover rent, such as marketing fees or service charges, cannot be recovered through CRAR.

2. Key Requirements:

   • The lease must clearly separate the portion of the turnover rent attributable to pure rent.
   • The amount due must be quantifiable and not dependent on further calculations or tenant reporting at the time of enforcement.

3. Challenges with Turnover Rent:

   • If turnover rent depends on tenant-provided financial data (e.g., sales reports), landlords must ensure they have received accurate and up-to-date information before proceeding with CRAR.
   • Disputes over turnover figures could delay enforcement or make it impractical to use CRAR.

Practical Considerations for Landlords:

1. Clear Lease Terms:

   • Ensure that the lease agreement explicitly identifies turnover rent as rent for occupation and separates it from other charges.
   • Specify how and when turnover figures must be reported and how disputes will be resolved.

2. Accurate Records:

   • Landlords must have access to the tenant’s sales data to determine the exact amount owed. Without accurate records, the use of CRAR may not be viable.

3. Alternative Recovery Options:

   • If turnover rent includes non-rent elements or if amounts are disputed, landlords may need to pursue recovery through debt recovery services or court action.

What Happens If Turnover Rent Is Not Properly Defined?

If the lease does not clearly state that turnover rent is attributable to the tenant’s occupation of the premises or if it bundles non-rent elements, CRAR cannot be used. Landlords may need to revise lease agreements for clarity or explore alternative recovery methods for such arrears.

Generally, a landlord cannot unilaterally decide how a tenant’s payment is allocated unless there is a clear agreement in the lease or prior consent from the tenant. The allocation of payments must be handled in accordance with the terms of the lease and any applicable legal principles.

Key Points on Payment Allocation:

1. Tenant’s Intention:

   • If the tenant specifies how the payment should be allocated (e.g., “this payment is for service charges”), the landlord is legally obligated to honor that intention.
   • Failure to do so could result in disputes or legal challenges.

2. Default Position (No Tenant Instruction):

   • If the tenant does not specify how the payment should be allocated, the landlord can apply the payment to the oldest debt first (e.g., rent arrears before service charges). This is a common approach to ensure rent is prioritized for compliance purposes, such as maintaining CRAR rights.

3. Lease Terms:

   • The lease may include clauses specifying the order of priority for payments (e.g., rent first, then service charges).
   • Landlords should review the lease terms carefully to ensure compliance.

4. Impact on CRAR:

   • Under Commercial Rent Arrears Recovery (CRAR), only pure rent can be recovered. If a tenant’s payment is applied to service charges instead of rent arrears, it may reduce or eliminate the landlord’s ability to use CRAR for recovery.

Practical Guidance for Landlords:

1. Request Clarity from the Tenant:

   • If the payment does not specify its purpose, seek clarification in writing from the tenant to avoid disputes.

2. Prioritize Rent:

   • In the absence of specific instructions from the tenant, prioritize allocating payments to rent arrears first, as this ensures ongoing compliance with CRAR and lease obligations.

3. Document Allocation Decisions:

   • Keep detailed records of payment allocations, including any correspondence with the tenant regarding their intent.

4. Avoid Misapplication of Funds:

   • Misallocating payments could lead to legal challenges, especially if the tenant can demonstrate that they intended the payment for a specific charge.

Conclusion:

While landlords can allocate payments to arrears or service charges in the absence of tenant instructions, they must act fairly and in line with the lease terms. Prioritizing rent arrears is generally advisable to maintain enforcement rights under CRAR. Open communication and clear documentation are key to preventing misunderstandings or disputes.

No, a landlord cannot directly issue an Enforcement Notice (as required under the Commercial Rent Arrears Recovery (CRAR) process) immediately following a demand for rent. There are specific procedural requirements that must be followed to ensure compliance with CRAR regulations.

Key Points on Issuing an Enforcement Notice:

1. Rent Must Be Due and Payable:
   • CRAR applies only to pure rent arrears (excluding service charges, insurance, or other non-rent charges).
   • The rent must be due and unpaid before an Enforcement Notice can be issued. A simple rent demand does not satisfy this requirement.
2. No Requirement for a Demand for Rent:
   • Under CRAR, there is no legal obligation to serve a demand for rent before issuing an Enforcement Notice. The notice itself initiates the recovery process.
   • A demand for rent is optional and may be issued by the landlord to remind the tenant of their arrears, but it is not a prerequisite for the Enforcement Notice.
3. Mandatory Notice of Enforcement:
   • The landlord must issue a Notice of Enforcement to the tenant before any enforcement action can take place.
   • This notice gives the tenant at least 7 clear days (excluding Sundays and Bank Holidays) to settle the arrears or make arrangements to pay.
   • The Notice of Enforcement must comply with specific legal requirements, including:
     • The amount of rent owed.
     • Details of the enforcement agent.
     • A clear deadline for payment.
4. Timing:
   • The Enforcement Notice cannot be backdated or issued prematurely. It must reflect the actual arrears at the time of issuance.

Practical Advice for Landlords:

• Issue Notices Separately:
  • If you wish to serve a rent demand, ensure it is distinct from the formal Notice of Enforcement to avoid confusion or legal challenges.
• Ensure Rent Is Clearly Due:
  • Before issuing the Enforcement Notice, confirm that the rent arrears are eligible under CRAR and are not disputed by the tenant.
• Comply with CRAR Requirements:
  • Failure to follow the proper procedure (e.g., issuing an Enforcement Notice without meeting the legal prerequisites) may render the enforcement action invalid and expose the landlord to legal claims.

Conclusion:

A landlord is allowed to issue an Enforcement Notice under CRAR, but it cannot be served as an immediate follow-up to a rent demand without observing the statutory requirements. The process begins with the Notice of Enforcement, which must provide the tenant with a fair opportunity to resolve the arrears.

Yes, enforcement action under the Commercial Rent Arrears Recovery (CRAR) process can still be taken if the lease has expired, provided the tenant remains in occupation of the premises. However, specific conditions must be met for CRAR to apply.

Key Conditions for Enforcement Under CRAR:

1. Tenant’s Occupation After Lease Expiry:

   • If the tenant continues to occupy the premises after the lease has expired, they are typically considered to be holding over under the terms of the original lease (a tenancy at will or periodic tenancy).
   • The landlord’s right to recover rent under CRAR remains valid in this situation, as long as the occupation is not disputed or unauthorized.

2. Eligibility of Arrears:

   • CRAR can only be used to recover pure rent arrears owed under a commercial tenancy.
   • Charges for service, insurance, or other non-rent items are excluded from CRAR enforcement.

3. Lease Type:

   • The original lease must have been for a commercial property and not a mixed-use or residential property.
   • The premises must still be used for commercial purposes.

4. Amount of Arrears:

   • There must be at least 7 days’ worth of unpaid rent for CRAR to be used.

5. Compliance with CRAR Process:

   • A Notice of Enforcement must be served, providing the tenant with at least 7 clear days to pay the arrears or make arrangements to settle.
   • Enforcement agents can only take control of goods after the notice period has expired.

Limitations:

1. Unauthorized Occupation:

   • If the tenant’s continued occupation is unauthorized (e.g., the landlord has explicitly demanded the tenant vacate the premises), the landlord may not be able to use CRAR. Instead, legal action to regain possession and recover arrears may be required.

2. Other Legal Actions:

   • If the landlord has initiated eviction proceedings or issued notices to terminate the tenancy, CRAR may no longer apply, as the tenancy relationship may be deemed terminated.

Practical Steps for Landlords:

1. Confirm the Tenant’s Status:

   • Establish whether the tenant is holding over under the terms of the original lease or if their occupation is unauthorized.

2. Ensure Arrears Qualify:

   • Verify that the arrears meet CRAR’s criteria for pure rent and are not disputed.

3. Serve the Notice of Enforcement:

   • Proceed with enforcement action by engaging certified enforcement agents and issuing a Notice of Enforcement in compliance with CRAR regulations.

4. Consider Alternative Legal Actions:

   • If the tenant is occupying the premises unlawfully or disputes the arrears, consider seeking legal advice to pursue debt recovery or possession through the courts.

Conclusion:

Enforcement action under CRAR is possible after a lease has expired if the tenant remains in occupation and rent arrears meet the eligibility criteria. However, landlords must carefully assess the tenant’s status and comply with all procedural requirements to ensure the enforcement action is lawful.

No, the Commercial Rent Arrears Recovery (CRAR) process cannot be used to recover rent arrears for properties with a mixed-use lease that combines both commercial and residential elements unless the lease clearly separates the commercial portion and rent attributable solely to it. CRAR is strictly limited to pure commercial tenancies and does not extend to residential properties or leases with a residential component.

Key Considerations for Mixed-Use Sites:

1. Type of Lease:

   • If the lease includes both commercial and residential use (e.g., a shop with a flat above rented under a single agreement), CRAR cannot be used.
   • If the commercial and residential parts are leased under separate agreements, CRAR can apply to the commercial lease only.

2. Clear Rent Allocation:

   • For mixed-use leases, CRAR may only be used if the lease specifically and clearly separates the rent attributable to the commercial premises. This ensures that CRAR is not used for the residential portion.

3. Alternative Recovery Options:

   • For rent arrears associated with the residential portion of a mixed-use property or if the lease does not separate the commercial element, landlords must use other debt recovery methods or legal actions, such as:
     • Pursuing a County Court claim for arrears.
     • Applying for possession proceedings if the tenant remains in breach of the lease terms.

4. Legal Restrictions:

   • CRAR’s exclusion of residential elements is intended to safeguard tenants from losing essential living spaces through enforcement meant for commercial rent recovery.
   • Attempting to apply CRAR improperly to a mixed-use lease could result in legal challenges and invalidate the enforcement action.

Practical Steps for Landlords:

1. Review the Lease Agreement:

   • Check whether the lease clearly separates the commercial and residential elements, including the specific rent amounts attributable to each.

2. Seek Legal Advice:

   • If the lease is unclear or disputes arise, consult a solicitor to determine the best recovery options for the arrears.

3. Use Alternative Recovery Methods for Residential Arrears:

   • For residential rent arrears, consider debt recovery services or pursuing legal action through the courts.

Conclusion:

CRAR can only be used to recover rent arrears for the commercial portion of a mixed-use site if the lease separates the rent for the commercial element. For mixed-use leases without such separation or for arrears tied to the residential portion, alternative recovery methods must be used.

A grace period in a lease agreement can delay or potentially limit the landlord’s ability to recover rent arrears through the Commercial Rent Arrears Recovery (CRAR) process, as CRAR can only be used once rent is legally due and payable under the terms of the lease.

Key Impacts of Grace Periods on CRAR:

1. Delayed Eligibility for CRAR:

   • If the lease includes a grace period (e.g., 7 or 14 days after the rent due date during which payment can be made without penalty), rent is not considered overdue until the grace period expires.
   • CRAR can only begin once the grace period ends and the rent remains unpaid.

2. Notice of Enforcement Timing:

   • The Notice of Enforcement required under CRAR cannot be issued until the arrears are due and payable. If the lease allows for a grace period, this notice must be delayed until after the grace period has expired.

3. Tenant Protections:

   • Grace periods provide tenants with additional time to make payments before enforcement action is triggered. This may reduce the likelihood of disputes or legal challenges but could also extend the landlord’s wait to recover arrears.

4. Landlord Considerations:

   • Grace periods may complicate cash flow for landlords, as the enforcement process cannot be initiated as promptly as in leases without a grace period.
   • Landlords must be careful to comply with the terms of the lease, as issuing a Notice of Enforcement prematurely (before the grace period ends) would be a breach of the lease and could invalidate the CRAR process.

Practical Steps for Landlords:

1. Review the Lease Agreement:

   • Ensure you understand the specific terms of the grace period, including how long it lasts and whether it applies to all rent payments or specific situations (e.g., late payment penalties).

2. Wait for Grace Period Expiry:

   • Do not begin the CRAR process or issue any enforcement notices until the grace period has fully expired and the rent is legally overdue.

3. Communicate with the Tenant:

   • Use the grace period to remind the tenant of their obligation to pay rent and avoid enforcement action. This can often result in arrears being cleared without needing further steps.

4. Document Payment Attempts:

   • Keep a record of any communication or payment attempts during the grace period to demonstrate compliance with the lease terms.

Conclusion:

Grace periods in lease agreements provide tenants with additional time to pay rent before it is considered overdue. For landlords, this means the CRAR process cannot begin until the grace period ends. While this delay can impact cash flow, it may also reduce the likelihood of disputes if tenants use the grace period to settle arrears.

• No, it is not possible to exercise both CRAR (Commercial Rent Arrears Recovery) and forfeiture simultaneously for the same period of overdue rent. These remedies are mutually exclusive under English law, and a landlord must choose one or the other for recovering arrears. Additionally, CRAR applies only to pure rent arrears and cannot be used to recover service charges or insurance, whereas forfeiture may address broader breaches of the lease.

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  Why CRAR and Forfeiture Cannot Be Used Together for the Same Period of Rent:

  1. Election of Remedy:

     • By using CRAR, the landlord affirms the continuation of the lease.
     • Forfeiture, on the other hand, terminates the lease due to the tenant’s breach (e.g., non-payment of rent).
     • Once CRAR is initiated (e.g., serving a Notice of Enforcement or taking control of goods), the landlord waives their right to forfeit the lease for that period of rent arrears.

  2. Legal Principle of Waiver:

     • Exercising CRAR indicates the landlord’s intention to allow the lease to continue, as the process relies on the existence of the lease for enforcement.
     • Forfeiture relies on the opposite principle: that the lease is terminated due to non-payment.

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  What About Rent, Service Charge, and Insurance?:

  • CRAR:

    • CRAR can only recover pure rent that is due and payable. It does not cover service charges, insurance, or other ancillary amounts unless these are explicitly defined as “rent” in the lease.

  • Forfeiture:

    • Forfeiture may be exercised for non-payment of rent, service charges, and insurance, provided these are enforceable terms of the lease and proper notice has been served (e.g., a Section 146 Notice for breaches other than pure rent arrears).

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  Options for Landlords:

  1. Choosing CRAR:

     • Use CRAR to recover pure rent arrears if you wish to maintain the lease and allow the tenant to remain in the property.
     • Seek alternative recovery methods for service charges and insurance if these remain unpaid.

  2. Choosing Forfeiture:

     • Forfeit the lease to regain possession of the property if the tenant’s breach extends beyond rent arrears (e.g., persistent non-payment of service charges or insurance).
     • Forfeiture allows for recovering all unpaid amounts (rent, service charge, insurance) as part of a broader claim once possession is regained.

  3. Combining Strategies:

     • You can use CRAR for pure rent arrears and pursue separate legal or debt recovery processes for service charges and insurance.
     • Alternatively, pursue forfeiture for all amounts due but recognize that once forfeiture is initiated, CRAR can no longer be used for that period of arrears.

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  Key Considerations:

  • Clear Decision: Once a remedy is chosen (CRAR or forfeiture), it cannot be reversed for the same period of arrears.
  • Mixed Arrears: For mixed arrears (rent, service charge, insurance), forfeiture may be the more comprehensive option if recovering all sums is critical.

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  Conclusion:

  A landlord cannot simultaneously exercise CRAR and forfeiture for the same period of overdue rent. If rent, service charge, and insurance are due, the landlord must decide whether to use CRAR for pure rent or pursue forfeiture for all outstanding amounts. Understanding the implications of each remedy is essential for effective recovery.