Tenant Not Paying Rent?
When a commercial tenant doesn’t pay its rent the landlord is left with several options, but some are more effective than others:
Option 1 – Forfeit The Lease And Take The Premises Back
If a landlord can re-let the premises to a better tenant at a better rent it may wish to exercise its right of re-entry to “forfeit” the lease.
It’s very effective and we can usually have the tenant out within 24 hours.
Option 2 – Levy Distress (NO LONGER AVAILABLE)
The right to distrain (to send the bailiffs in to take possession of the tenant’s goods) no longer exists. It has been replaced by CRAR.
Option 3 – CRAR: Commercial Rent Arrears Recovery
This regime is not very popular as you must first serve advance warning on the tenant of your intention to take possession of their goods, losing the element of surprise that was so effective with distress. Feel free to call me if you’d like to discuss this.
Option 4 – Letter Before Action
We can send a “Letter Before Action” for the arrears to put the tenant on notice that it if doesn’t pay up within a set period of time it is at risk of being sued.
Option 5 – Take The Tenant To Court
If the tenant doesn’t pay up after being issued with a Letter Before Action the next step is to issue proceedings at court to obtain a quick money judgment.
Option 6 – Pursue A Former Tenant, Guarantor or Subtenant
If a former tenant provided a guarantee we may be able to claim the arrears from them. The same may be true of an original guarantor. And, if there is a subtenant in occupation, we can serve a notice on them to divert their sub-rent to you instead.
Option 7 – Draw Down On A Rent Deposit
This could be your first port of call. Often landlords will require their tenants to provide a deposit, which can be drawn upon if the tenant doesn’t pay its rent. They’re usually drafted to require the tenant to top up the balance once the funds have been drawn upon.
Option 8 – Insolvency Proceedings
Another option is to serve a “Statutory Demand” upon the tenant giving it 21 days to pay the arrears. If it doesn’t you are then entitled you to present it with a winding up petition.
Its a great shock tactic to scare tenants into paying. It works very well!
Option 9 – Talk To Your Tenant
You don’t have to take any action. Instead you could talk to your tenant to see what the issue is. They have just forgotten to pay. Alternatively the might be struggling and need some extra time to pay, or a short deferment. If you’re inclined to agree a concession to help your tenant trade through a difficult period, you could go with option 10…
Option 10 – Agree a Concession
During tricky times it often makes more sense for a landlord to work with its tenant to help it remain solvent and profitable – it can often take a long time to find a new tenant, so some rent can be better than none. You can agree any concession you like with a tenant: a reduction; monthly rather than quarterly payments,; a rent holiday; and/or a future repayment plan.
Make a Free Enquiry
If you’d like to discuss a property related dispute you can call me now on 020 7842 1452 . Alternatively, email me at: ian@propertydisputes.co.uk or complete a Free Online Enquiry and I’ll get in touch as soon as I can for a chat about your legal rights and options. There’s no cost or obligation.