Important information for commercial landlords and tenants

Posted 01/02/2013

The Tribunals, Courts and Enforcement Act 2007 (TCEA 2007) received Royal Assent on 19 July 2007, and there are suggestions that Part 3 may be brought into force this year. This is important to commercial landlords and tenants as it will replace the ‘remedy of distress’ with a new procedure, known as commercial rent arrears recovery (CRAR).Distress for rent is an ancient common law remedy which allows landlords to recover arrears of rent by seizing goods and selling them to cover the arrears, without giving notice or obtaining permission from the court. CRAR on the other hand will put more restrictions and duties on a landlord.First of all, landlords will have to serve a warning notice to a tenant before exercising the right to seize goods. This may allow tenants the opportunity to remove their goods and apply to court for the notice to be set aside or to stop the process altogether.

Secondly, whereas previously landlords could seize goods themselves without authorisation, CRAR states that unless the landlord satisfies the criteria for being an enforcement agent, the landlord will have to appoint a certified enforcement agent to carry out CRAR on its behalf.

Thirdly, arrears of any payments reserved as rent in the lease can be recovered by the current remedy of distress. The new procedure, however, will not allow for the recovery of service charges, insurance charges, rates and council tax, even if these sums are reserved as rent in the lease.So if, and when, Part 3 of the TCEA 2007 is brought in, the recovery of rent arrears by seizing and selling goods will still be available to commercial landlords – albeit in a more costly, formalised manner. This could be seen to favour the tenant and may limit the amount which can be recovered by the landlord.