Landlord’s beware! Recent changes in the law mean that the previous right of distress (a landlord’s right to enter a commercial premises and remove a tenant’s goods and sell them in order to claim back arrears) has now been abolished.
In its place is a new procedure for commercial rent arrears recovery (PCRA) which came into force on 6 April 2014. PCRA applies to all commercial tenancies (except for licences, agricultural holdings or unwritten tenancies).
PCRA is far more prescriptive than distress. In particular, landlords should note the following
When can PCRA be used?
- PCRA can only be used for arrears of annual rent, whereas distress could be used for any sums reserved as rent under the lease
- PCRA cannot be used for mixed commercial/residential tenancies unless there is a breach relating to the residential element
- PCRA cannot be used after the lease has ended, except in very specific circumstances.
What notice is needed?
- at least seven clear days notice of enforcement must be given to the tenant under PCRA (this will alert the tenant and enable them to remove their goods from the property). Although there is no set form, the notice must contain certain prescribed information
- notice must also be given to the tenant after PCRA containing prescribed information as to what has been taken and how the tenant can recover their goods.
Entry and selling goods – When and how?
- entry to the property can generally only be exercised between 6am and 9pm
- goods must be sold at public auction unless leave of the court is given for alternative means of sale
- the tenant must be give seven clear days notice of the intended sale
- only an authorised agent (similar to a certified bailiff) can exercise PCRA
- entry can only be gained via doors (not windows)
- PCRA can only be exercised over certain goods.
In addition, PCRA waives any right of the landlord to forfeit that has arisen, so careful thought will be given as to how the landlord will deal with any existing breaches other than non-payment of annual rent.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.