The Ministry of Justice has recently initiated a long overdue consultation on the future of distress, which could have significant implications on how commercial landlords can recover rent arrears from tenants.
Distress, which dates back for several centuries, is the right of the landlord of commercial premises to instruct a bailiff to seize goods from the premises to the value of the rent owed (which includes all sums defined by the lease as "rent" – service charges for example). The advantage of distress is that it is a fast and cost effective method of enforcement, without recourse to the Courts.
The Tribunals Courts and Enforcement Act 2007 introduced a new regime known as Commercial Rent Arrears Recovery ("CRAR"), abolishing the current law of distress and replacing it with a new process, requiring a landlord to give notice to a tenant before goods can be seized – thus removing the surprise element.
However, five years later, the CRAR provisions of the 2007 Act
are still not in force.
The latest consultation is seen to give new breath to the CRAR
regime, adding some of the details, including the restriction of
the right of seizure to actual rent only; a minimum level of
arrears; and restricting the means of entry to the premises.
A summary of responses to the Consultation Paper is expected shortly.
Distress is undoubtedly heading for the history books
– it is just taking its time to get there!
The Consultation Paper can be found via this link.
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