Here is the transcipt from our quick training video on the CRAR procedure, with slides available here:
Here’s a quick training video explaining what Commercial Rent Arrears Recovery is, otherwise known as CRAR. This will help you understand how a landlord of a commercial property can take action to collect tenant rent arrears by seeking to cease the actual items of the tenant and re-sell these.
This is a drastic measure, and has evolved since 2014 from the previous principle of distrain and instructing bailiffs, and although under CRAR there are now more procedures and time limits to slow and soften the process down, it is still a serious remedy that all commercial property landlords, tenants, and other parties need to be aware of.
In terms of how this is carried out, here are 10 of the most important aspects to it, with full details available at our resources website.
1. You must have a written lease in place between a landlord and tenant, although this right actually comes from legislation and so doesn't need specific reference in the lease.
2. It is only for pure commercial property, so even any part with another use like a flat above a shop under the same lease will mean CRAR is not applicable.
3. It is only for pure rent arrears, including VAT and interest, but excluding other costs like service charges and insurance premiums, even if they’re labeled as rent.
4. CRAR can only be implemented by an authorised Enforcement Agent. This excludes any landlord directly, or even a solicitor.
5. There are 2 main notices needed with 7 days notice each, one after the other. Now these must have correct information on them, and only begun after the arrears are due.
6. An Enforcement Agent can first attend the property to complete a Controlled Gods Agreement which is basically a list of what actual tenant goods are available to claim.
7. An Enforcement Agent can finally attend for Ceasure of Goods and taking items from the property to re-sell in order to pay the arrears.
8. It’s important to note the costs involved, and who will eventually pay these on top of the main arrears.
9. The tenant does have a right of appeal and application to the court, to make sure CRAR is being implemented fairly.
10. Finally, watch out for tenants being insolvent for both longer-term prospects to pay rent and immediately being able to instigate CRAR.
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