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Coronavirus – Landlord’s enforcement options at commercial and residential premises

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Following the introduction of the Coronavirus Act 2020 and the proposed Corporate Insolvency and Governance Bill, the government is continuing to introduce legislation in response to the coronavirus outbreak.

The Taking Control of Goods and Certification of Enforcement Agents (Amendment) (Coronavirus) Regulations 2020 (“the Regulations”) were laid before Parliament on 24 April 2020 restricting, in certain circumstances, how enforcement can take place at both residential and commercial properties during the coronavirus pandemic.

Residential Properties and Highways

Parties can seek to enforce money judgments by taking control of a Defendant’s goods. The court will, upon an application from a Claimant, issue a writ or warrant control which commands a court bailiff or enforcement agent to take control of and ultimately sell a judgement debtor’s goods. The Regulations recently introduced however, prevent such enforcement for as long as the restrictions that prevent a person from leaving their home without reasonable excuse remain in place. The Regulations also apply to goods (such as vehicles) left on the public highway.

An enforcement agent only has 12 months from the issue of any enforcement notice to take control of goods. To avoid that period expiring whilst the prohibition on residential enforcement is in place, the Regulations also automatically extend that period by a further 12 months where the period comes within one month of expiry for as long as the restrictions are in place.

Commercial Rent Arrears Recovery

The current moratorium on forfeiture of a commercial lease introduced by the Coronavirus Act 2020, along with the proposed restrictions on the use of Statutory Demands and Winding-up Petitions to be set out in the Corporate Insolvency and Governance Bill, have left commercial landlords considering what they can do to recover unpaid rent.

A commercial landlord can seek to exercise Commercial Rent Arrears Recovery (“CRAR”). CRAR allows a landlord to instruct an enforcement agent to take control of a tenant's goods and sell them in order to recover an equivalent value to the rent arrears. The minimum level of net unpaid rent required to give notice and exercise CRAR is usually seven days net unpaid rent.

However, the Regulations have increased the minimum net unpaid rent to an amount equivalent to 90 days net unpaid rent for as long as the protections on forfeiture set out in the Coronavirus Act 2020 remain in place.

The restriction on the use of CRAR, in light of the proposed restrictions on Statutory Demands and Winding-up Petitions, point to the Government being keen to promote commercial Landlords and Tenants reaching their own arrangements for payment of rent in these challenging times.

If you are a commercial landlord or tenant who would like to discuss the points raised in this blog, please contact our Property Litigation Team.

Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.