AFG Law offers a full range of legal services for individuals and businesses alike. Many of the firm’s services are provided UK-wide, with physical offices located in Bolton and Bury.
My commercial tenant has stopped paying rent. What can I do?
For a commercial landlord, discovering that a tenant has stopped paying rent can quickly become a serious concern.
The arrears may be increasing each month, while the landlord continues to have their own financial obligations relating to the property.
The good news is that commercial landlords have several options.
The right one, however, depends on the lease, the amount owed and whether the landlord ultimately wants the tenant to stay or leave.
At AFG Law, our dispute resolution team advises landlords on commercial leases and the options available when tenants fall into arrears.
Start with the lease
Before taking action, the first step should be to check the commercial lease.
It should establish when rent is due, whether interest is payable on overdue sums, whether a rent deposit is held and what rights the landlord has if the tenant fails to pay.
If the tenant has previously paid reliably, it can also be worth finding out why the payment has been missed.
A business experiencing a temporary cash-flow problem is very different from one that appears to be insolvent or has repeatedly failed to pay.
Where both parties want the tenancy to continue, an agreed repayment arrangement may sometimes be the most commercially sensible solution.
What if I want to recover the rent?
There are several potential routes for rent recovery.
If a rent deposit is held, the landlord may be entitled to draw from it, depending on the terms of the rent deposit deed.
Another option in qualifying cases is Commercial Rent Arrears Recovery (CRAR).
This allows a landlord of qualifying commercial premises to instruct an enforcement agent to take control of a tenant's goods to recover certain unpaid rent.
A landlord may also consider bringing a debt claim through the courts to recover money owed.
What if I want the property back?
Where a commercial lease contains a forfeiture clause, non-payment of rent can potentially give the landlord the right to end the lease.
Depending on the circumstances, this can be done through court proceedings or by peaceable re-entry.
However, forfeiture is a significant step and landlords should take legal advice before changing locks or attempting to recover possession.
The tenant may also be able to apply to the court for relief from forfeiture.
Act before the arrears escalate
The most appropriate response to unpaid commercial rent is not always the most aggressive one.
Sometimes preserving a good tenancy is preferable; in other circumstances, recovering the debt or bringing the lease to an end may be the priority.
What matters is understanding your options before taking action.
AFG Law's Dispute Resolution team can advise commercial landlords on rent arrears, lease obligations, rent deposits, recovery options and forfeiture.
For advice on commercial lease issues, visit www.afglaw.co.uk, call 01204 920102 to contact AFG Law's team in Bolton.
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