Re: Winter 2013/14 - Page 109

distress Bringing an end to Following many reviews and delay (the legislation was passed in 2007) the remedy of distress for commercial tenants is coming to an end with effect from April 2014. From 6th April 2014 distress will be abolished, landlords of commercial tenants will only be allowed to send in the bailiffs after giving notice, thus removing the ancient right for the landlord to have bailiffs arrive unannounced to seize goods of the tenants to pay the arrears of rent. Distress is to be replaced by Commercial Rent Arrears Recovery (“CRAR”) which will provide a statutory right to recover arrears of rent using a prescribed procedure. The key points to keep in mind are: q The law of distress will be abolished, it will only be possible to seize goods through the new CRAR procedure, and then only if the outstanding sums exceed a minimum of 7 days’ rent (after deduction of interest, VAT and set-off). w The procedure only applies to commercial premises and will not apply to mixed use premises, if the lease includes residential property, the landlord will not be able to use the procedure. e re must be a written tenancy agreement in place for CRAR to be available; it does not apply where there is a verbal tenancy. CRAR will be available for tenancies at will but not for a tenancy at sufferance or occupation under a mere licence. Once the notice has been served by the landlord, the tenant can make an application to Court to have the notice set aside or to delay execution. y A 7 day minimum notice period must given prior to the seizure of goods. Once the notice has expired only authorised enforcement agents will be able to seize goods. Landlords will no longer be able to act themselves u The CRAR procedure specifies the manner in which enforcement is to be carried out. The law of Distress was reviewed many times in the past, however for commercial landlords it has been regarded as a useful piece of their armoury where tenants have fallen into arrears. The new law when it comes into force will no doubt be seen as making the recovery of rent arrears more difficult. The new notice procedure will allow tenants the opportunity to remove goods to prevent their seizure and to consider entering into an insolvency procedure prior to the date of entry. For those landlords about to create a new lease the changes due to come in effect next year need to be borne in mind and they ought to ensure that they take a rent deposit and guarantees from the tenants if they were not already intending to do so. By Darren Stone r The procedure is only available for the recovery of rent, not service or other charges. t A written notice will need to be given in a prescribed form setting out the rent which has fallen due and is unpaid, any interest payable, and any VAT applicable. 107