Distress to be Replaced by CRAR
Landlord and Tenant
A consultation on the implementation of the Tribunal Courts and Enforcement Act 2007 closed on 14 May 2012.
The Act received Royal Assent back in 2007 but has yet to come in to force. It abolishes the remedy of Distress and replaces it with a modified statutory procedure of Commercial Rent Arrears Recovery (CRAR) as a means to recover arrears from defaulting tenants.
The CRAR is a self help remedy. The process is initiated by the Landlord who instructs an enforcement agent to take goods or collect rent up to the value of the arrears from the Tenant.
The consultation proposed increased regulation of enforcement agents to protect tenants from aggressive bailiffs.
It is anticipated that CRAR will come into force in October 2012 and will be applied retrospectively to all leases.
Many landlords fear that CRAR will make the recovery of costs more difficult as it can only be exercised on purely commercial property, cannot be used for service charge arrears and written notice must be served to the tenant 14 days before action – giving them time to remove goods that might otherwise be taken.
If the system does not work it is suggested there could be a rise in litigation or landlords might rely on other means to protect their position such as rent deposit deeds and guarantees.
Landlord and Tenant Solicitors Eastbourne, Hailsham, Polegate
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