This post was written by Katherine Campbell and Siobhan Hayes.
We previously posted a short guide to the new commercial rent arrears recovery procedures (‘CRAR’). As CRAR comes into force on 6 April 2014, we wanted to pick out a key issue in how the timing will work.
Under the final version of the regulations, it remains the case that for a landlord to exercise CRAR, there has to be a minimum amount of 7 days’ rent overdue. It seems to us that as soon as the quarter’s rent is overdue, the amount is more than 7 days’ rent and so the process can begin immediately. We have seen some more cautious commentary around that the rent itself has to be overdue for 7 days before a notice is served. We think that is unduly cautious and landlords should be able to exercise when, as the regulations say, an amount equal to 7 days’ rent is overdue.
As we know, notice of the enforcement agent’s intention to take goods has to be served by the agent on the tenant and also that notice has to give the tenant 7 clear days before the enforcement agent can take control of the tenant’s goods.
The 7 clear days are unusual. It is neither 7 days nor 7 working days but 7 days excluding Sundays and bank holidays. This is how 7 clear days will look when there are no bank holidays or problems with serving the notice –
If a quarter’s rent falls due on a Monday and is not paid:
- the first formal CRAR notice can be served by an enforcement agent on the Tuesday and
- unless served by hand on the Tuesday or electronically (and receipt can be proved) then the notice is not going to be received before the Wednesday (at best) and
- Thursday to the following Thursday are the 7 clear days
- the following Friday is the day the enforcement agent can take control of the tenant’s goods
Landlords used to the remedy of distress will lose the advantage of surprise when trying to collect in their unpaid rents so will want to use CRAR in the most efficient way possible. For some tenants the threat of the bailiffs has always been enough to ensure that the landlord is a creditor they cannot ignore. It is to be hoped that CRAR notices from enforcement agents will have the same impact.