Commercial Rent Arrears Recovery CRAR

Commercial landlords who want to recover rent arrears can use a new procedure called Commercial Rent Arrears Recovery (CRAR). Read this guide for further information.

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What is CRAR and how does it work?

Commercial Rent Arrears Recovery (CRAR) is a statutory procedure which allows landlords of commercial premises to recover rent arrears by taking control of the tenant's goods and selling them. CRAR came into force on 6 April 2014 and applied with immediate effect to all new and existing commercial leases from that date onwards.

In order to use CRAR, a landlord must provide 7 days notice of enforcement. Once this period has expired, Certificated Enforcement Agents (as opposed to other types of bailiffs) may enter the property (through an open or unlocked door) in order to seize goods.

CRAR applies whether or not reference is made to it in the lease.

Sub-tenants - landlords can still require sub-tenants to pay rent directly to clear any rent arrears, using a statutory procedure very similar to CRAR (but 14 days notice is required rather than 7).

Anti-avoidance - There are anti-avoidance provisions in place to prevent landlords from modifying, changing or substituting the CRAR procedure in order to recover rent arrears. Landlords must use the CRAR procedure. Any other procedure is void and potentially criminal.

How does CRAR apply?

  • CRAR only applies to premises which are wholly commercial in use - not for mixed use or residential leases
  • CRAR can only be used to recover principal rent - it cannot be used to recover other sums (eg service charges and insurance premiums)
  • CRAR can only be carried out by Certified Enforcement Agents following the statutory procedure

Who can use CRAR and what are the requirements?

As a general rule, only landlords of commercial premises, where the tenant remains in occupation of those premises, can use CRAR. There must also be a lease in writing. A contractual licence to occupy will not suffice.

A minimum sum equivalent to 7 days' rent needs to be outstanding before any action can be taken, and notice of enforcement containing prescribed information must be given to the tenant at least 7 clear days before any goods are taken. It is possible to ask the court to reduce the notice period if there is a risk of tenants removing goods from premises (eg during an insolvency).

Other requirements of CRAR include:

  • details must be included in notice served on the tenant
  • notice must be served in a specific way
  • time limit for seizing goods from the notice being served (12 months)
  • goods can only be seized at certain times
  • only certain types of goods can be seized (and an inventory must be made)
  • goods seized must be valued and not be sold for at least 7 days

When can CRAR not be used?

CRAR cannot be used if:

  • the leased property is mixed use or residential
  • the lease has come to an end (subject to certain exceptions)
  • any of the arrears cannot be calculated with certainty (eg in the case of turnover rents)
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