By Thomas Melville
At the outset of a commercial tenancy, most landlords don’t expect tenants to fall behind on rent. However, even the most reliable tenants can encounter financial difficulties, so it’s always best to be prepared.
The commercial property team at Ralli Solicitors LLP, can advise you from the outset of a tenancy to help put safeguards in place and reduce the risk of rent arrears. But if you find yourself in a situation where your tenant won’t – or can’t – pay, our commercial dispute team can help you explore the most effective way to recover what you’re owed.
Seven key legal and practical options for recovering commercial rent arrears
Each situation is different, and some remedies may be more effective or commercially sensible than others. The best approach will depend on the individual circumstances of your case, but in summary, the main options for recovering commercial rent arrears include:
1. Forfeiting the lease
This allows you to bring the lease to an end due to non-payment of rent. Forfeiture can be a powerful remedy, but it’s important to act carefully to avoid waiving your right to do so.
2. Using a rent deposit deed
If you hold a rent deposit, you may be able to deduct unpaid rent from the sums held under the rent deposit deed.
3. Making a claim under a bank guarantee
Where a bank guarantee has been provided, you may be able to recover rent directly from the bank up to the guaranteed amount.
4. Exercising Commercial Rent Arrears Recovery (CRAR)
This statutory procedure allows landlords to recover rent arrears by instructing enforcement agents to take control of the tenant’s goods and sell them to recover the outstanding rent.
5. Issuing a statutory demand and winding-up petition
If the tenant company owes more than £750 and fails to pay within 21 days of receiving a statutory demand, you may be able to apply to wind up the company.
6. Bringing a court claim
You can issue a court claim to obtain a County Court Judgment (CCJ) for the arrears. This can then be enforced through various methods, depending on the tenant’s assets.
7. Pursuing guarantors or third parties
If the lease includes a guarantor or other party who has agreed to be liable for the tenant’s obligations, you may be able to pursue them for the unpaid rent.
Utilise the services of Ralli Solicitors LLP’s dedicated commercial property legal team
Our team can advise on the most appropriate strategy for your circumstances, ensuring the process is as straightforward and cost-effective as possible. Furthermore, if you are a commercial landlord and need help recovering rent arrears, our commercial dispute team can provide clear, practical advice tailored to your situation.
Call us on 0161 832 6131 or email enquiries@ralli.co.uk to speak with a member of our expert legal team.
In the meantime, you can learn more about our Commercial Property legal services here: ralli.co.uk/practice-areas/corporate-law/commercial-property