Repossession or recovery? How to decide what action to take

Repossession

When commercial tenants run up rent arrears, choosing the best course of action can be tricky. But one thing's certain: letting the debt build while your property suffers more wear and tear is no solution. So let’s take a look at how you can regain control of your asset, and when is the right time to act.

Assessing the situation

Before taking any action, advise the tenant that their payment is late. Contact them using as many different methods as possible, to ensure your message reaches them. 

Next, try to assess the state of their finances. Whether they have the cash liquidity or the assets to cover their rent arrears will inform your next steps. Ideally, you want to reach an amicable settlement. If the tenant has raised concerns over the property, a mediation service could be helpful.

However, if your tenant is either wilfully avoiding payments or unable to pay, you should act quickly to settle arrears and regain control of your property.

Recovering rent arrears

If a tenant is over a month in arrears or has missed payment dates specified in the lease, you can use what's known as Commercial Rent Arrears Recovery (CRAR) to recoup unpaid rent, interest charges, VAT and recovery costs. It doesn’t cover management fees, maintenance costs, utility bills or insurance premiums.

To use CRAR, you’ll need a certificated Enforcement Agent such as Dukes Bailiffs to obtain permission from the court. Tenants are then given at least seven days ‘Notice of Enforcement’, allowing them to avoid enforcement by setting up a repayment plan. After this time, agents may enter the property to seize and sell assets.

Repossessing your property

If tenants can’t pay, have insufficient assets or are damaging your property, forfeiture of lease may be a better option. In these cases, it’s wise to skip recovery processes under CRAR and move straight to eviction, as CRAR can affect your right to forfeit the lease.

Once you’ve established clear breaches of your lease or have evidence of damage to your property, an Enforcement Agent can issue a 'Warrant to Forfeit' and take control of your property. Unlike recovery, the cost of forfeiture is borne by the landlord.

Contact Dukes Bailiffs to find out how we can help you recover commercial rent arrears or reclaim your property.