29th May 2018
A landlord faced with a tenant who is not paying their rent has two options: take steps to end the lease or try to recover the money owed. If you decide to recover the rent you might find the commercial rent arrears recovery scheme a good option as Staffordshire debt recovery solicitor, Tim Newsome at Myers & Co Solicitors in Stoke-on-Trent, explains:
‘The commercial rent arrears recovery scheme is a self-help remedy for landlords which allows you to take and sell a tenant’s goods to the value of what is outstanding. There are limits on the circumstances in which the scheme applies, but outside of these restrictions it can be a very effective way to recover what you are owed.’
The key features to note are:
If you suspect that the tenant will try to move their goods to try to avoid them being seized, you can ask the court for permission to shorten the amount of warning notice you need to give them. You can also side-step the prohibition on using the scheme where any part of the premises is being occupied for residential purposes if that use is in breach of the terms of the lease.
If recovery under the commercial rent arrears scheme is not available or is inappropriate, there are a number of other options that could be considered. For example, if you took a rent deposit from the tenant you may be able to use this to cover the arrears, although you need to bear in mind that if you do this it will deplete what is left to cover other breaches. This is likely to be the case even if the rent deposit deed requires the tenant to top up the deposit because the chances of the tenant being able to do this if they are already in arrears with the rent is extremely low.
If the tenant’s obligations under the lease are guaranteed by a guarantor, you may be able to claim the rent arrears from them. You may also be able to claim against a former tenant who remains liable under the lease, either because they entered an authorised guarantee agreement with you or because the lease was granted before 1996. Any guarantor of a former tenant may also remain liable.
There are, however, important practical points to note about enforcing against former tenants and guarantors:
Recovering rent arrears from a commercial tenant can be challenging, but getting legal advice early on can greatly improve your chances of a successful outcome. The commercial rent arrears recovery scheme can be a useful tactic and is significantly cheaper and quicker than making a claim through the courts. However, you may have other options that might result in a better outcome and which need to be considered alongside this. There may also be other factors at play, such as the tenant’s possible collapse into insolvency, that need to be considered and which may justify you bypassing attempts at recovery and going straight for forfeiture instead. If this is the case you need to be careful not to prejudice your position by doing anything that could be construed as a waiver of your right to evict the tenant, such as subsequently accepting payment of rent arrears.
If you need help recovering commercial rent arrears, or have any other commercial property issue that requires input from a solicitor, please contact Tim Newsome on 01782 525011 or email email@example.com
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.