31 May 2013 by Yezdan Izzet

Stress or distress? An update on the landlord’s remedy of distress

It can be a major stress on any commercial landlord’s business when their tenant defaults on the rent. The common law remedy of distress presently allows a landlord to instruct bailiffs to seize and sell goods from their tenant’s premises to an equivalent value of the rent arrears. Although all commercial landlords should maintain good relations with their tenants and not rush to take action, distress provides landlords with a fast cost effective alternative remedy to forfeiture or issuing a court debt action.

The key points about distress for landlords to note include: (1) distress cannot be exercised if the lease has already been ended; (2) distress can only be used to recover unpaid monies expressly reserved as rent under the lease, so service charges, costs and interest are not automatically covered; (3) the landlord must check if permission from the court is necessary before exercising distress, such as when the tenant is in administration or liquidation; and (4) landlords should only employ certificated bailiffs.

Instructing certificated bailiffs is straightforward. Landlords must provide the bailiffs with a copy of the lease, details of the rent arrears and practical information about entering the premises. Bailiffs do not have to give a tenant prior notice before entering the premises, but must be careful only to enter the premises during normal business hours, and not use force to gain access. Once in the premises, the bailiff can either remove and sell goods belonging to the tenant or enter into a ‘walking possession’ agreement listing the goods that will be seized unless the tenant settles the rent arrears within a short period of time. The bailiff will look to recover their fees, charges and expenses from the tenant, although these fees are capped by statute.

The government is planning to abolish distress in its current form. The Tribunals, Courts and Enforcement Act 2007 introduced Commercial Rent Arrears Recovery (CRAR) to replace distress. Under CRAR, landlords will have to give tenants 7 days notice before instructing bailiffs to effect distraint. The definition of ‘rent’ will also exclude VAT, interest and service charges regardless of the definition of rent in the lease. The CRAR procedure has not been brought into law yet. However, the Crime and Courts Act 2013 now provides for regulations to bring the CRAR into force sometime in April 2014.

For further information on recovering commercial rent arrears, please contact us at info@boltburdon.co.uk

14 May 2013 by

Changes to the registration of Lasting Powers of Attorney (LPAs)

The new timeframes for the registration of lasting powers of attorney (LPA) come as a welcome change to a well documented and (very) long winded registration process.

24 May 2013 by

Live/Work Units – the essentials

Many buyers looking for a residential flat will stumble across “live/work” units. But many do not fully understand what a “live/work” unit is. If you are one of them, then this blog is for you...

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