Where a landlord is owed rent, the first instinct may be to reach for the bailiffs to carry out Commercial Rent Arrears Recovery (CRAR) and remove the tenant’s goods.
The case of Thirunavukkrasu v. Brar and another reminds us of the dangers of exercising CRAR in situations where a landlord may also look to forfeit the lease for non payment of rent.
The tenant had missed a rent payment. The landlord instructed enforcement agents, who attended the property and took control of the tenant’s goods.
The landlord then took action to forfeit the lease by way of peaceable re-entry 12 days later and went on to recover £8,270 from the proceeds of sale of the tenant’s property.
The tenant initiated proceedings against the landlord for damages on the grounds that the landlord no longer had the right to forfeit the lease because it waived it by removing the tenant’s goods using CRAR.
At the first hearing, the judge ruled in favour of the tenant using the analogy of distress, the common law remedy that preceded CRAR.
The landlord fared no better in the Court of Appeal and the appeal was dismissed on several grounds, one of which being:
- the exercise of CRAR amounts to an unequivocal act confirming a landlord’s decision to treat a lease as continuing. As such, it will waive the right to forfeit for that event of default just as it always did for distress.
Points to note
Landlords must keep in mind the danger of waiving the right to forfeit by inadvertently acknowledging the lease as continuing. This can happen where bailiffs are instructed to exercise CRAR or even just by corresponding with the tenant about its arrears. If forfeiture is the main aim, then the best plan is for the landlord and agent to cease all correspondence and even phone calls with the tenant until forfeiture occurs and that can be difficult particularly if you have to wait 14 or even 21 days from defaulting on the rent payment to the point at which a landlord can forfeit.
CRAR is still available to a landlord after a lease has ended, but not if it is ended by forfeiture.