Table of Contents
When you lease your commercial building to a business owner, you do so to make money on your property. Your commercial lease agreement will detail the amount of rent they must pay you as well as the frequency of it. A lease agreement is a legally binding contract between you and your tenant, so you must both abide by it. Unfortunately, however, sometimes commercial tenants fail to fully adhere to their lease agreement, such as by falling behind with the rent for their commercial premises. If this occurs, you may decide to use the Commercial Rent Arrears (‘CRAR’) process to help with rent arrears. This article will explain three key reasons landlords use the CRAR procedure to help with rent arrears.
What is the CRAR Process?
The CRAR process is a statutory process for landlords in the UK to recover rent arrears from their commercial properties. Essentially, the CRAR process allows you to recover rent arrears from your commercial tenant by seizing and selling their goods. You will ask a Certified Enforcement Agent to do this for you.
What Are the Reasons a Landlord Should Use CRAR?
There are reasons a commercial landlord like you may choose to use the CRAR process. We take a look at some of these below.
1. Recovers Rent
A key reason commercial landlords may choose to use the CRAR process is that it allows them to recover unpaid rent from their commercial tenant. When a tenant owes rent to their landlord, this naturally means that the commercial landlord is out of pocket. However, regardless of the fact that your tenant owes you rent, you will still have to pay the costs you are responsible for in the commercial building. For example:
- buildings insurance;
- costs to cover service bills; and
- any mortgage on your commercial property.
2. Statutory Procedure
As a commercial landlord, you may use the CRAR process because it is a statutory procedure. Therefore, the law details precisely what this process to recover rent is. It also prevents you from modifying the process, as there are anti-avoidance provisions that stop this.
As the CRAR process is a statutory procedure, it means that it is transparent in terms of what you need to do. It also means that your commercial tenant cannot dispute your actions, provided you follow the legal procedure correctly.
For example, you must give at least a day’s notice before the Certified Enforcement Agent can seize goods. You also have to serve it in a specific way. You do not even need to include the CRAR process in your commercial lease as, by law, it applies automatically to all leases.
3. Fast Action
You might decide to go down the CRAR route as a commercial landlord recovering rent from your tenant due to the timing of it. CRAR is a rent recovery process that you can use as soon as your commercial tenant owes you at least seven days’ worth of rent. Although you have up to 12 months to seize goods from your commercial tenant after you serve them an enforcement notice, you can do so as soon as seven days have passed.
This means that the CRAR process is much faster than taking court action to recover rent from your tenant. You can even ask the court to allow you less than seven days from the notice to recover goods. You can do this where you fear that your tenants may remove goods before the seven days expire.
This cheat sheet outlines what you should be aware of in your lease agreement.
Call 0808 196 8584 for urgent assistance.
Otherwise, complete this form and we will contact you within one business day.
Key Takeaways
If you are a commercial landlord with a commercial lease, you may find that your tenant has fallen behind with their rent. When this occurs, you may decide to use the CRAR process. This article has explained three critical reasons for using this procedure. It explains that one reason is because it allows you to collect rent that your tenant owes you. The article also explains that you may choose the CRAR process because it is a statutory provider, so it is clear. The third reason you may select the CRAR process is because it is a fast way to recover rent.
If you need help undertaking the CRAR process, our experienced leasing lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.
We appreciate your feedback – your submission has been successfully received.
