What is the Commercial Rent Arrears Recovery (CRAR) Process?

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• What is Commercial Rent Arrears Recovery?
• How Does the CRAR Process Work?
• Other Considerations
• Key Takeaways
• Frequently Asked Questions

As a commercial landlord, receiving regular rental payments from your tenants is critical. Unfortunately, some tenants can fall behind on their rent. This creates a problematic situation and can amount to a lease dispute. Where this occurs, a landlord has several options open to them. First, it is always advisable to communicate with your tenant and try to come to an agreement. Where this is not possible, the Commercial Rent Arrears Recovery (CRAR) process is an option a landlord may take. This article will explain the Commercial Rent Arrears Recovery (CRAR) process.

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What is Commercial Rent Arrears Recovery?

Commercial Rent Arrears Recovery (CRAR) is an enforcement action process to recover rent for commercial property leases. This procedure allows a commercial landlord to recover rent arrears from their tenant. It is a relatively quick and efficient process for a landlord to recover missing rent, though it should not substitute open communication with your tenant. 

As a landlord, you cannot automatically conduct the CRAR process for rent arrears. Instead, specific conditions need to be in place, including that the:

• tenant is already in rent arrears;
• number of years must be known and exact;
• arrears must be at least seven days’ worth of rent; and
• tenant must still owe the rent arrears when the actual enforcement occurs.

How Does the CRAR Process Work?

To recover rent arrears through the CRAR process, an enforcement agent will seize the tenant’s assets currently on the commercial property. They will then sell them, and the proceeds will go towards the rent arrears debt the tenant owes you. You can only receive what amounts to the rent arrears debt and no more.

The specific legal process for CRAR is as follows:

• compliance stage – the landlord sends their tenant a seven-day enforcement notice which details what the arrears are and gives the option of paying within seven days;
• enforcement stage – an enforcement officer seizes the tenant’s goods; and
• disposal stage – an enforcement officer sells the tenant’s goods to recover rent for rent arrears. 

The CRAR process only allows enforcement officers to seize the tenant’s goods on the commercial premises and not other goods which may be present.

Other Considerations

Notably, CRAR is a landlord’s process to recover rent arrears. You cannot use it to collect other debts the tenant owes you, such as service charges or insurance rent. There are strict legal time limits for the CRAR process, which a court may, in some circumstances, be able to extend.

Likewise, you cannot use the CRAR process if you are part of a tenancy at sufferance or a commercial licence but can for a tenancy at will. Also, rent arrears do not count for the CRAR process where they are from the subtenant to the landlord. 

The rules that apply for CRAR differ for agricultural holdings.

Key Takeaways

Commercial Rent Arrears Recovery (CRAR) is an enforcement action to recover rent arrears from a tenant. As a landlord, you can begin this process if your tenant owes at least seven days’ worth of rent. Still, it is vital to communicate with your tenant and come to an agreement before seeking alternative rent recovery methods. It could be as simple as a misunderstanding. 

Once you decide to undertake CRAR, there are time limits in place and you must only seek payment for rent arrears. If your tenant owes you money for other costs, such as service charges, CRAR is not the process to take. 

If you need help with disputes arising from your commercial lease, 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. Call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions