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The Abolition of Distress for Rent

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On 6 April 2014, Part 3 of the Tribunals, Courts and Enforcement Act 2007 (“TCEA”) abolished the common law remedy of distress for rent and replaced it (in relation to commercial premises) with Commercial Rent Arrears Recovery (CRAR).

A landlord may as from 6 April 2014 use CRAR via a certificated bailiff where

  • The lease is of commercial premises where no part of the premises can be let as a dwelling
  • The lease is in writing
  • The lease has not expired
  • There is a “minimum amount” of at least seven days’ rent in arrears.

“The rent” which the landlord may use CRAR to recover means rent properly so called, together with interest and VAT.  It will not include sums payable under the lease reserved as “rent” but which are not rent, such as service charges and insurance premiums.   

The CRAR process

The tenant must receive seven clear days’ notice (excluding Sundays, bank holidays and Christmas Day), although this can be shortened by court order if the goods may be moved to avoid seizure.  The notice is in a prescribed form.

The landlord may only exercise its CRAR remedies through an Enforcement Agent (usually a certificated bailiff) duly authorised by the landlord or its agent (e.g. its solicitor or managing agent) and can only take place between 6.00 am and 9.00 pm on any day of the week, save that where the tenant normally trades outside these hours, the enforcement agent may take control of its goods during those business hours of operation.

This due authorisation will contain an indemnity by the landlord in favour of the Enforcement Agent in respect of any act properly done by him or her.

The Enforcement Agent may generally only take control of goods found on the demised premises.

Entry to the premises for the purposes of enforcement must be by usual means of entry.

In place of a Walking Possession Agreement, control of goods is achieved via a Controlled Goods Agreement.  This gives the enforcement agent control over the goods listed in an attached inventory (“Controlled Goods”) and allows the tenant further time to pay the rent.  This will usually be seven days.

Interference with Controlled Goods without lawful excuse will be a criminal offence.

Goods on the premises not owned by the tenant and tools and equipment of the tenant's trade up to an aggregate value of £1,350 are exempted from Controlled Goods Agreements.

The tenant must be given seven clear days’ notice before the sale of the goods. This may be reduced where the value of the goods would be reduced due to the nature of those goods if the sale took place after seven days.

The notice of the date time and place of the sale must be in writing and signed by the Enforcement Agent.

The sale may only be held in a public auction house or an online internet auction. The sale may however, be held on the premises where the goods were found where those premises are occupied solely for the purposes of a trade or business.

The sale must be conducted by a qualified auctioneer or where the auction is online it must be independent from the Enforcement Agent.

Effect of tenant’s insolvency

CRAR is subject to provisions of the Insolvency Act 1986.  As from 6 April 2014 references to “Distress” in the Insolvency Act 1986 will be taken to be references to CRAR.  The practical consequence is that the limitations imposed upon Distress by the Insolvency Act will apply to CRAR.

For further advice on this or any other commercial property issues please contact any of our Property Litigation team:

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