It’s understandably frustrating when your tenant stops paying rent. It’s easy for the situation to get to you, especially when you have your financial commitments and overheads to consider. However, this is not the time to be all spiteful. The best solution is to act reasonably and decisively. Legally speaking, here’s what you can do when your tenant doesn’t want to pay rent:
Rent Arrears Recovery
You can possess the goods of your non-paying tenant and be able to sell them legally through a statutory procedure called commercial rent arrears recovery, or CRAR. It allows the owners of commercial premises to recover tenant’s rent arrears by selling their tenant’s goods.
The procedure was in effect since April 2014. Not only was it applied with immediate effect to all existing commercial leases from that date onwards but also for new ones.
To apply this procedure to your situation, you must give your tenant a notice of enforcement. If your tenant doesn’t comply within the given period, you can enter the premises and seize the tenant’s goods.
However, you can only enter the premises with a Certificated Enforcement Agent (a person appointed under Part 3 of the Tribunals, Courts, and Enforcement Act). Also, the property’s doors should be unlocked. You cannot force entry.
Claiming possession of your premises is called forfeiture. All commercial leases are advised to contain a forfeiture clause within the lease contract because even though you own the business premises, your authority as a landlord is severely restricted without it. In other words, you can only forfeit the lease if there is a specific clause in the contract that permits you to do so.
When you can rightfully forfeit, you can apply it through one of two methods:
The first is referring to a court for possession. While this is typically the preferred choice, it should only be considered as a last option. This is because court proceedings, as all of them are, can be lengthy and costly.
The second option is a peaceable re-entry. With this option, you are allowed to enter the premises and change the locks. However, the tenant can counter this move with a "relief from forfeiture" applied at court. With such action, your tenant can repossess the property and claim compensation for losses incurred due to wrongful eviction.
Contracting Out of the Landlord and Tenant Act
Another option is contracting out of the Landlord and Tenant Act. Often, this type of agreement is applied when landlords own several properties within an area or building. So how does it work?
If you don’t want your tenant to renew rental rights, you can choose this option. Under this type of agreement, a tenant has no right to renew the lease or even remain in the premises when the contract expires. A negotiation will have to be in effect if a tenant wishes to renew the lease.
To apply this agreement, you are required to serve a formal notice to the tenant, who must declare that the rights stated in the contract are met and understood.
As soon as the rent is late, you should take it seriously. Let your tenant know that you don’t like this kind of behavior. Ultimately, you can avoid other problems before the situation becomes out of hand. Moreover, seek relevant legal advice as much as possible.