Key CRAR Points

On 6 April 2014, a new set of rules relating to the recovery of commercial rent arrears by seizing tenants’ goods came into force.

The new Commercial Rent Arrears Recovery (CRAR) legislation was designed to introduce greater control over an area which was considered by many to be outdated and insufficiently regulated.  Many of the new regulations are quite restrictive and there are additional steps that both landlords and their enforcement agents must now take.

Here are 10 points you should know about CRAR.

The Property

CRAR applies only to leases of commercial premises. If the property (or any part of it) is let, underlet or occupied as a dwelling, you cannot use on CRAR.

The Lease

CRAR can be used only by a landlord if the lease under which the tenant occupies is in writing.

The Rent

CRAR can be used only to recover principal rent. Even if your lease includes sums such as service charge or insurance as “rent” you cannot recover these additional sums using CRAR.

Enforcement

CRAR can be exercised only by Certificated enforcement agents.

7 Days’ Notice

The days when a bailiff could turn up at a property unannounced and seize a tenant’s goods are gone. To start the process, an enforcement agent is required to give seven clear working days’ notice of the intention to exercise CRAR. The tenant must be in arrears of at least seven days’ rent prior to serving the notice.

What can be Seized

There is detailed guidance on goods belonging to a tenant that cannot be seized. These include items of equipment necessary for the tenant’s personal use in its employment, business, trade, profession, study or education such as computer equipment and vehicles. However, the exemption applies only where the total value of the items is below £1,350.

Inventory

Once goods have been seized, an inventory must be prepared and given to the tenant by the enforcement agent at the time or as soon as reasonably possible.

Valuation

The goods must be valued within seven days of seizure by an independent party. Once valued, the goods must be sold or disposed of for the best price that can be reasonably obtained. A period of seven clear days from the removal of the controlled goods (and clear days do not include Sundays or bank holidays) must pass before the sale can take place.

Losing Right to Forfeit

If a right to forfeit has already arisen, exercising CRAR may amount to a waiver of that right.