Collecting and Enforcing Commercial Rent Arrears under lock down what are the Landlords Options?
The Coronavirus Act 2020 introduces a moratorium on forfeiture of lease by peaceable re- entry for non – payment of rent until at least 30th June 2020
Whilst this will relieve the worries of many tenants struggling in the current crisis it will deeply affect the landlord’s ability to collect their rents and forfeiture is a very important tool in a landlords arsenal.
This does not cover all as the moratorium detailed in section 82 of the Coronavirus Act 2020 applies to a "relevant business tenancy", only defined as being one under Part 2 of the Landlord and Tenant Act 1954.
This moratorium includes not only rent but other sums due under the lease like services charges and insurance.
The moratorium prevents forfeiture for non-payment of rent including any arrears which have been incurred before the relevant period, and it is irrelevant if these arrears were incurred as a result of the Coronavirus or not.
It is not a waiver of a landlord’s right to forfeit so the tenant must continue to pay rent and interest will occur at the rate provided for in the lease.
There are a few ways the landlords may try and enforce their rights:
Statutory Demand
The landlord could consider issuing a Statutory demand under the insolvency act as a precursor to insolvency proceedings as the threat of insolvency may give the tenant that push to pay. On the other hand, it may backfire and force them into insolvency whereby the IP disclaims the lease
Court proceedings for recovery of money against the tenant or the guarantor
A claim may be issued against the tenant or guarantor via the landlord’s solicitor or by using money claim online. This may have the desired effect and can be later enforced by the High Court Enforcement officers however the courts are very slow and backlogged at the moment and most HCEO are not visiting during the lock down due to social distancing measures.
Remove money from rent deposit
Initially this may be a short-term solution to use money from the rent deposit This however will quickly run out if the deposit isn't promptly topped up by the tenant. If this was not topped up it would also give grounds to a further right to forfeit the lease.
Commercial Rent Arrears Recovery (CRAR)
This gives the right for the landlords to instruct Certificated Enforcement Agents to take control of the tenant’s assets on the premises. The first issue would be is the premises open and is there enough assets to satisfy the debt. Can the Enforcement Agents do this correctly without breaking the social distancing rules? Do they have the correct PPE as their health and safety is also your responsibility?
Most Enforcement Agents are not currently working doing visits though they can issue the Notice of enforcement which binds the goods.
Here to help with the right advice
It amazes me how many competitors of Quality Bailiffs are still advertising saying they will do forfeitures.
We are still open for business still there to help but we will not risk our staff, break the law or risk your reputation.
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