Archive for September, 2013

Distress in the commercial property market

The historic, common law right enabling a landlord to instruct bailiffs to collect rent from its tenant without obtaining a court order is much used, particularly in the commercial property market.  The bailif is empowered first to take ‘walking possession’ of the tenant’s goods found at the landlord’s premises and, unless the rent is then paid, to secondly, sell those goods (known as the common law right to distrain) in order to recover outstanding arrears of rent (and arrears of monies reserved in a lease as rent) plus the bailiffs’ fees.  Distress is a quick, cheap and very, very effective remedy.

In consequence, when the much heralded section 71 in Part 3 of the Tribunals, Courts and Enformcement Act, 2007 stated that this common law right is abolished (i.e. in relation to both commercial and residential rent arrears) and a new procedure, requiring first a landlord’s notice to be given to the tenant, for just commercial rent arrears recovery (CRAR) introduced by secton 72, there was consternation amongst landlords.  Although the Government of the day would not repeal the provisions, they were not implemented and uncertainty hung over them.

However, the Government has now introduced in England and Wales The Taking Control of Goods Regulations, 2013 thereby confirming the CRAR provisions.  They relate to commercial rent (plus VAT and interest) only and do not extend to residential rent arrears nor to any other monies reserved in a lease as ‘rent’ e.g. service charges and insurance payments.  They are due to come into force in April 2014.

If you wish to hear more, why not contact Hatherleigh Training?