DEALING WITH A TENANT’S NON-PAYMENT OF RENT
Option Procedure Advantages and Disadvantages
Under the limitation Act 1980, an action to recover a debt such as Easily enforceable
Debt action rent, must be commenced within 6 years of the sum falling due Don’t have to remove the tenant
Simple procedure
34.8.1(a) textbook
Tenant might be insolvent so debt recovery would
be pointless/waste of money
Forfeiture Right to retake possession of the premises and so prematurely Can retake possession of the premises early
determine the lease. The right must generally be reserved expressly
by the lease (cl 6.1.1 & 6.1.2(a) on the facts). The right is enforced in
one of two ways: by court order, or by peaceable re-entry. Has to be an express provision in the lease for
Where the breach is a failure to pay rent, before attempting to forfeiture
forfeit the lease the LL should consider whether a formal demand for Removes the tenant
rent needs to be served on the tenant - will be required unless the
forfeiture clause dispenses with the need for it: most leases of
commercial property will dispense with the need for a formal
demand and the forfeiture clause should therefore be checked. If no
formal demand is required, the landlord can proceed to forfeit the
lease either by peaceable re-entry (go in ‘out of hours’ and change
the locks) or by court order. The tenant may claim relief against
forfeiture and the court may grant relief on any terms it sees fit.
34.8.3.1 textbook
Commercial Rent Landlords have the power to enter the premises and remove and sell Able to seize goods to sell at auction and recover
Arrears Recovery goods owned by the defaulting tenant, but subject to the following the money owed
Procedure (CRAR) restrictions: Doesn’t remove the tenant
(a) applies to leases of commercial premises only. If any part Very good from a threat value perspective
let/occupied as a dwelling (except in breach of a term of the
, lease), CRAR not available. Can’t be used where lease is oral. Impacts on tenants ability to trade and therefore
(b) only available in relation to ‘pure’ rent arrears (ie rent paid their ability to make money - impacts viability as a
for possession and use of the premises), and at least 7 days’ tenant
rent must be outstanding. Arrears of other payments (e.g. Assets that you seize may not be worth very much
service charge and insurance rent) aren’t recoverable even if Have to serve an enforcement notice, then have to
reserved as rent in the lease. get an enforcement agent to remove the goods
(c) LL required to serve an enforcement notice on defaulting - Can be costly
tenant, giving him at least 7 days’ clear notice (excluding Sun Tenant can apply to court to have the notice set
& bank hols) of its intention to enter the premises. On the aside
expiry of notice, only an enforcement agent able to enter the - Takes time
premises to remove goods. LL may apply to court for an Can be stressful
order that the notice period be shortened if it’s likely that
goods will be moved to avoid removal by the enforcement
agent. Under s78 TCEA 2007, a T who receives an
enforcement notice may apply to court for an order that the
notice be set aside, or that no further steps be taken under
the CRAR procedure without a further court order.
(d) Certain goods are exempt and can’t be seized. Set out in reg
4 of the Regulations and include items or equipment up to
the value of £1,350 necessary for the T’s business.
(e) Enforcement agent must give the T at least 7 days’ clear
notice of any sale of the seized goods (unless would become
unsaleable or substantially reduced in value as a result of the
delay). Must be sold at a public auction.
(f) Any provision in a lease (or other contract) that purports to
allow seizure of goods (outside of the CRAR procedure) for
non-payment of rent will be void.
34.8.4 textbook
Collecting rent Possible under s81 of the Tribunal Courts and Enforcement Act 2007. Don’t have to remove the original tenant
from a sub-tenant If CRAR is available to a landlord in respect of its immediate tenant,
the landlord may serve notice on any sub-tenant, setting out certain CRAR has to be available
prescribed information including the amount of rent owing. Effect of Have to have a sub-tenant
Option Procedure Advantages and Disadvantages
Under the limitation Act 1980, an action to recover a debt such as Easily enforceable
Debt action rent, must be commenced within 6 years of the sum falling due Don’t have to remove the tenant
Simple procedure
34.8.1(a) textbook
Tenant might be insolvent so debt recovery would
be pointless/waste of money
Forfeiture Right to retake possession of the premises and so prematurely Can retake possession of the premises early
determine the lease. The right must generally be reserved expressly
by the lease (cl 6.1.1 & 6.1.2(a) on the facts). The right is enforced in
one of two ways: by court order, or by peaceable re-entry. Has to be an express provision in the lease for
Where the breach is a failure to pay rent, before attempting to forfeiture
forfeit the lease the LL should consider whether a formal demand for Removes the tenant
rent needs to be served on the tenant - will be required unless the
forfeiture clause dispenses with the need for it: most leases of
commercial property will dispense with the need for a formal
demand and the forfeiture clause should therefore be checked. If no
formal demand is required, the landlord can proceed to forfeit the
lease either by peaceable re-entry (go in ‘out of hours’ and change
the locks) or by court order. The tenant may claim relief against
forfeiture and the court may grant relief on any terms it sees fit.
34.8.3.1 textbook
Commercial Rent Landlords have the power to enter the premises and remove and sell Able to seize goods to sell at auction and recover
Arrears Recovery goods owned by the defaulting tenant, but subject to the following the money owed
Procedure (CRAR) restrictions: Doesn’t remove the tenant
(a) applies to leases of commercial premises only. If any part Very good from a threat value perspective
let/occupied as a dwelling (except in breach of a term of the
, lease), CRAR not available. Can’t be used where lease is oral. Impacts on tenants ability to trade and therefore
(b) only available in relation to ‘pure’ rent arrears (ie rent paid their ability to make money - impacts viability as a
for possession and use of the premises), and at least 7 days’ tenant
rent must be outstanding. Arrears of other payments (e.g. Assets that you seize may not be worth very much
service charge and insurance rent) aren’t recoverable even if Have to serve an enforcement notice, then have to
reserved as rent in the lease. get an enforcement agent to remove the goods
(c) LL required to serve an enforcement notice on defaulting - Can be costly
tenant, giving him at least 7 days’ clear notice (excluding Sun Tenant can apply to court to have the notice set
& bank hols) of its intention to enter the premises. On the aside
expiry of notice, only an enforcement agent able to enter the - Takes time
premises to remove goods. LL may apply to court for an Can be stressful
order that the notice period be shortened if it’s likely that
goods will be moved to avoid removal by the enforcement
agent. Under s78 TCEA 2007, a T who receives an
enforcement notice may apply to court for an order that the
notice be set aside, or that no further steps be taken under
the CRAR procedure without a further court order.
(d) Certain goods are exempt and can’t be seized. Set out in reg
4 of the Regulations and include items or equipment up to
the value of £1,350 necessary for the T’s business.
(e) Enforcement agent must give the T at least 7 days’ clear
notice of any sale of the seized goods (unless would become
unsaleable or substantially reduced in value as a result of the
delay). Must be sold at a public auction.
(f) Any provision in a lease (or other contract) that purports to
allow seizure of goods (outside of the CRAR procedure) for
non-payment of rent will be void.
34.8.4 textbook
Collecting rent Possible under s81 of the Tribunal Courts and Enforcement Act 2007. Don’t have to remove the original tenant
from a sub-tenant If CRAR is available to a landlord in respect of its immediate tenant,
the landlord may serve notice on any sub-tenant, setting out certain CRAR has to be available
prescribed information including the amount of rent owing. Effect of Have to have a sub-tenant
