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.
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