What to do when a commercial tenant stops paying rent

As a landlord of commercial premises whose tenant has stopped paying rent, it is easy to assume that the tenant has financial issues. However, before taking action explore whether there are any other reasons for the non-payment. For example, is the tenant actively withholding rent for some reason? You should try to ascertain all of the circumstances before you rush to take recovery action against the tenant. In particular, consider whether the debt to you is disputed. Once you have done this, there may be a range of options for recovery of rent arrears including:

commercial property for rent

(1) Using a deposit

You may be able to use any deposit you hold to cover rent arrears. This could be useful if the tenant is having short-term difficulties. 

(2) Paying arrears in instalments 

If you would like to maintain your relationship with the tenant, one option may be to consider accepting payment of the arrears by instalments. Should you choose this course of action you will need to ensure that you have a formal agreement in place. To do otherwise may lead to you not being able to terminate the lease if the instalment payments are not made as agreed.

(3) Ending the tenancy – forfeiture 

Where a tenant is unlikely to be able to pay the arrears and future rent then most commercial leases will enable a landlord to “peaceably” enter and take possession of the premises once a particular period of time has passed and certain circumstances have arisen. If you are considering this option take care to avoid doing something which are not entitled to do or will unintentionally lead you to waive your rights. 

Alternatively, you can issue Court proceedings for both the rent arrears and forfeiture of the tenancy.

(4) Recovering arrears 

If you wish to recover rent arrears there are various options including:

–    the Commercial Rent Arrears Recovery Scheme (CRAR) enabling you to take control of the tenant’s goods and sell them
–    taking action against any guarantor to the lease
–    issuing a Statutory Demand – a formal demand which could be the first step in bankruptcy (an individual) or liquidation of a company

AMD Solicitors’ commercial property solicitors in Bristol are very experienced at dealing with all the challenges facing landlords and will work with you to find the best solution for you. For more information on recovering rent arrears, contact solicitor Janine Harris by calling her office on 0117 973 3989 or email her at janineharris@amdsolicitors.com

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This article is provided for general information purposes only and represents our understanding of the relevant law and practice as at the date of uploading. This article should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.

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