Ending distress - introducing the new Commercial Rent Arrears Recovery or ‘CRAR’ process
Some time ago our property litigation partner, Nick Cox, wrote a piece on legal phrases which explained that in law ‘distress’ was a legal remedy available to landlords where tenants of commercial premises have defaulted in paying rent.
It is an ancient and often effective way of keeping tenants on the straight and narrow allowing the landlord to send in bailiffs to seize goods to the value of the arrears. But they will not be able to do so for much longer!
On 6 April 2014 distress will cease to be. Instead landlords will be able to use the snappily-named Commercial Rent Arrears Recovery or ‘CRAR’ process.
Why has it changed? And will it be as effective?
The change seems to have been driven by the need to rein in bailiffs from being heavy handed in executing their duties. This idea came in with legislation in 2007 and is only now being brought into force, but regulations will be needed to clarify some of the important issues.
As to its effectiveness, on the plus side, CRAR will be possible any day of the week from 6am to 9pm. Many commentators feel this is a small benefit when compared with the main change which may make the process much less effective. That is the requirement that a landlord must give the tenant notice that he intends to instruct bailiffs.
The main advantage of distress was that the bailiff would arrive unannounced. CRAR will require seven clear days (not counting Sundays and Bank Holidays) and will carry with it a right to challenge the notice. The opportunities for evading the bailiff are obvious. Some landlords may perhaps start buying shares in van hire companies!
From April 2014 distress is dead; long live CRAR. However, we doubt it will have such a long and useful reign.