crar procedure property management guideThe overall objective under the new CRAR Commercial Rent Arrears Recovery procedure is actually the same as the current distain, it just approaches it in a softer way. So for tenants of commercial properties with rent arrears, there is an ability of the landlord to begin proceedings to seize and then sell the tenants own goods in order to pay these arrears.

One major difference is the notice periods now involved, designed to slow the whole process down in order to provide the tenant some breathing space, with two important 7-day notice periods. The first is the initial notice of the arrears and intended action which can only be served after 7 days from when the arrears became due, and automatically makes any due day maybe on a typical quarter-day last another 7 days before any further action can be actioned, as opposed to the short-cut route previously of being able to instruct a bailiff straight away on site.

The second notice period is also 7 days long and must specify the proposed date, time, and place of any proposed sale of goods with the tenants. Failure of these periods will cause breach of the new CRAR regulations, and any goods deemed as illegally abandoned by anyone and must be immediately returned to the tenant. All this must also be actioned through an appointed Enforcement Agent acting on behalf of any landlord, not directly by the landlord, and although in reality they may be the same firm as the previous ‘bailiffs’ they are under a different instruction and authority and therefore care must be taken to make sure they have this ability and are correctly instructed.

In the middle of this process is the ability to ‘take control of goods’ under the CRAR legislation, as opposed to the right of distain under the current legislation. At the right time the Enforcement Agents can secure the goods on the premises or elsewhere and look to selling in order to recover the due monies, or they can enter into a Controlled Agreement which is similar to the current Walking Possession. This agreement is essentially a list of what specific goods are being ear-marked for eventual sale, and although nothing may be done about them there and then, there is a formal agreement that they will be secured after a period of time if the debt is still due.

The Controlled Agreement therefore does allow the debtor to retain control and custody of these goods for a certain period of time and therefore accepts that these cannot be removed or disposed of or allow anyone else to, until this debt is settled – the landlord has a legal right over them meaning no action can be taken by the tenant.

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