Guides & Advice

Commercial rent recovery: no CRAR, no problem

Published: 13th January 2021
Area: Property Disputes
In an effort to lessen financial pressure on businesses, on 10 March 2021 the government extended the restriction on the use of the Commercial Rent Arrears Recovery (CRAR) process by landlords.

This measure will increase the total number of days' outstanding rent required for CRAR to be used to:

  • 457 days (between 25 March 2021 and 23 June 2021), and
  • 554 days (between the 24 June 2021 and 30 June 2021).

However, with this being a popular option for landlords looking to recover unpaid rent, what other debt recovery routes are available in the meantime?

What is CRAR?

Commercial Rent Arrears Recovery (CRAR) is a procedure that allows commercial landlords to recover rent by taking possession of a tenant’s goods with a view to selling them. No court proceedings are necessary, with certificated enforcement agents able to enter the property and seize the goods for sale at auction after seven clear days’ notice to the tenant has been given.

Negotiating commercial lease terms/concessions

Although CRAR is an efficient way to regain funds, renegotiating contracts can be the best alternative for the longer term.

During this process, compromise on both sides is key. For example, this could mean lowering the amount of monthly rent in return for an extension on the lease (or another benefit to the landlord).

Issuing court proceedings

The second alternative involves issuing court proceedings to recover the debt. Much like CRAR, this option means that, once a judgment is secured against the tenant, enforcement officers are able to enter the tenant’s property to remove goods.

Unlike CRAR, this method also gives landlords the opportunity to issue a claim for other sundries, meaning more money can be recovered. However, this does come at a cost, from court fees to further expenses that may come later down the line.

When choosing this path, landlords must:

  • Issue a Letter Before Action (LBA), which informs the tenants that court proceedings are being considered. This acts as a formal demand for money owed and gives the tenant chance to pay or contest.
  • Be clear about what they are claiming for and why, whether it be purely rent or other items as well.
Can a landlord forfeit a commercial lease?

As a last resort, landlords can forfeit (i.e. terminate) the lease. However, bear in mind that finding another tenant can be hard in the current climate.

Light at the end of the tunnel

With the rollout of the COVID-19 vaccines, there is the hope of financial recovery in 2021. However, if landlords are struggling with cash flow due to unpaid rent, court proceedings are always an option.

Nevertheless, negotiation often should be the first port of call, with the outcome potentially being better for both parties. These are complicated times for everyone and demonstrating flexibility landlords and tenants can keep relationships strong.

Contact us

Our commercial property disputes and debt recovery teams can help you through this difficult period and guide you towards a solution - contact James Fownes or Jayne Gardner for advice and support.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to director’s responsibilities, insolvency, restructuring, funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

SHMA® ON DEMAND

Listen to our SHMA® ON DEMAND content covering a broad range of topics to help support you and your business.

Employment Breakfast: Disciplinary Processes – Getting them right

13 Dec

Nick Jones, Partner - Employment | Cecily Donoghue, Senior Associate - Employment
Employment Breakfast: Disciplinary Processes – Getting them right

Employment Law experts Nick Jones and Cecily Donoghue will guide attendees through an overview […]

Biodiversity Net Gains – new mandatory requirements for developers

30 Nov

Anna Cartledge, Partner | Louise Ingram, Partner
Biodiversity Net Gains – new mandatory requirements for developers

New mandatory requirements (introduced by the Environment Act 2021) will drive the delivery and […]

Directors’ Forum: Social Housing – In the eye of a perfect storm

23 Nov

Louise Drew, Partner & Head of Building Communities | Jon Coane, Partner
Directors’ Forum: Social Housing – In the eye of a perfect storm

Registered providers are facing more challenges than ever, with increasing demand conflating with growing […]

Leicester Curry Club – November

22 Nov

Lisa Botterill, Partner
Leicester Curry Club – November

Our next Leicester networking lunch of 2023 will take place on Wednesday, 22 November […]

Our Latest Thoughts

All the latest views and insights on current topics.

Arrears Crisis And Winter Energy Costs Escalate Consumer Concerns

23 Nov

Debt

Arrears Crisis And Winter Energy Costs Escalate Consumer Concerns

Read article Right Arrow

Dispute Resolution Expert Joins Scottish Firm In Edinburgh

17 Oct

Litigation & Dispute Resolution

Dispute Resolution Expert Joins Scottish Firm In Edinburgh

Read article Right Arrow

India’s Approach To Crypto Regulation And Investment Scams

3 Oct

Litigation & Dispute Resolution

India’s Approach To Crypto Regulation And Investment Scams

Read article Right Arrow

Charities and Business Rates – How Should Relief be Applied?

26 Aug

Charities

Charities and Business Rates – How Should Relief be Applied?

Read article Right Arrow

Administrations Up 22% In 2023

16 Aug

Banking & Financial Services

Administrations Up 22% In 2023

Read article Right Arrow