20th August 2013
The Government has confirmed that the ancient common law remedy of distress is to be replaced with a new statutory procedure. The Commercial Rent Arrears Recovery (CRAR), which will be created by Part 3 of the Tribunals, Court and Enforcement Act 2007 will come into force on 6 April 2014.
The common law remedy of distress allows a landlord to exercise self-help in relation to rent arrears. It provides landlords with the mechanics to recover rent arrears without going to Court by taking goods from the demised premises and either holding them until the arrears are paid or selling them. It is an especially useful remedy where a tenant has valuable goods on his premises. It’s currently a speedy process weighted largely in favour of landlords. But it is all about to change.
The new statutory remedy available under CRAR is more restrictive than common law distress, and will make it more cumbersome for landlords to recover rent arrears from tenants.
It is clear that CRAR will be more restrictive than distress but is likely to remain a useful remedy for landlords for rent arrears of commercial premises with valuable goods which are difficult to mobilise quickly.Careful consideration should be given to the drafting of new commercial leases and updating leases to remove references to distress and to prepare for CRAR.
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