Commercial Rent Arrear Recovery (CRAR) is a process which landlords can use to recover rent arrears from a commercial tenant. It allows a landlord to instruct an enforcement agent to take control of a tenant's goods and sell them in order to recover an equivalent value to the rent arrears. CRAR requires various notices to be served on the tenant by the enforcement agent at each stage of the process. The usual minimum amount of rent that must be outstanding before the CRAR process can be invoked must be equivalent to at least 7 days rent .
However, in light of the financial strains that COVID-19 has given rise to, the government has decided to amend the current regulations which govern the CRAR procedure. Of particular significance is that they have increased the minimum amount of rent that must be outstanding in order from a landlord to invoke the CRAR procedure, from 7 days to 90 days. This amendment will remain in place until at least 30 June 2020, subject to any further extension of this deadline by the UK government.
Landlords should be bear in mind that where the tenant is paying rent quarterly, they may attempt to temporarily defeat the amended CRAR provisions by making a small payment in order to bring the total net rent arrears under the required 90 days’. This would only work for a short amount of time, however, as once a second quarter day is reached, a more significant payment would be needed to reduce the net rent arrears under 90 days’ equivalent.
If you would like any further information on any of the above, or would like to discuss your particular circumstances and how Knights could help, please contact a member of our Dispute Resolution team.