How to use CRAR to recover commercial rent arrears

Commercial rent arrears recovery (CRAR) is a method of recovering rent arrears from commercial property that came into force on 6 April 2014.

This process allows a landlord to instruct an enforcement agent to effectively take control of a tenant’s goods and sell them to recover an amount equivalent to any rent arrears. CRAR requires that notices be served on a tenant in advance of any enforcement agent's attendance at each stage of the process. Certain information must be included in the notices, and the landlord should take care that, if the enforcement agent offers to draft the notices for the landlord, the contents are correct.

To what leases does CRAR apply?

It applies to all tenancies of commercial premises, whether legal or equitable, and includes tenancies at will. The tenancy must be in writing for CRAR to apply. If the tenancy is only oral, CRAR cannot be exercised. CRAR cannot be applied to a tenancy at sufferance, which is a situation where a tenant remains in occupation of the premises after the lease has expired, but the landlord does not confirm that they are willing for the tenant to remain in occupation.

Importantly, CRAR only applies to tenancies and does not apply to any licence arrangements or for non-payment of licence fees.

Can I use CRAR and then forfeit the lease?

The short answer to this is no. A landlord needs to think very carefully about what remedy they want to exercise. If an enforcement agent is instructed to use the CRAR process and serves notice, then that will waive the landlord’s right to forfeit, and even if the CRAR process does not recover an amount equal to the arrears, the landlord would then have to wait until another forfeiture event has arisen before they could then terminate the lease.

Can you use CRAR when a lease has ended?

You can only use CRAR if a lease has ended, if either:

• Control of the goods was taken before the lease ended, or rent was due and payable before the lease ended, and all of the following are satisfied:
• The lease did not end by forfeiture;
• Not more than six months have passed since the lease ended;
• The rent was due from the person who was the tenant at the end of the lease;
• That person remains in possession of any part of the premises;
• Any new lease under which that person remains in possession is a lease of commercial premises; and
• The person who was the landlord at the end of the lease remains entitled to the reversionary interest.

What does 'commercial premises' mean for CRAR?

Premises are treated as commercial premises provided none of the following is relevant:

• The premises nor any part of them are let as a dwelling;
• The premises nor any part of them is let under an inferior lease as a dwelling;
• The premises nor any part of them are occupied as a dwelling.

Who can exercise CRAR?

Only the landlord. If the landlord’s interest is jointly owned, any joint owner can instruct an enforcement agent to recover rent due to all owners.

If the landlord’s interest in the property is subject to a mortgage, the lender can exercise CRAR if the mortgagee has given notice of its intention to take possession or to enter into receipt of rents, and the lease is binding on the mortgagee.

What rent can be recovered?

In this context, 'rent' is the amount payable under the lease for the possession and use of the premises, together with any interest and VAT chargeable. It does not include any sum in respect of Council Tax, rates, services, repairs, maintenance, insurance, or other sums, even if such amounts are reserved as rent under the lease. If the lease provides for the tenant to pay an inclusive rent (one that includes an element of rent and perhaps business rates or utilities), then only the proportion that is attributable to the possession and use of the premises is recoverable under CRAR. This can lead to difficulties in practice ascertaining how much is truly attributable to rent only.

What conditions have to be satisfied for CRAR?

Under section 77 of the Tribunal Courts and Enforcement Act 2007 (“TCEA 2007’’), the following conditions have to be satisfied before CRAR can be exercised:

• The tenant must be in arrears of rent before the notice of enforcement is given;
• The amount of the arrears must be certain or capable of being calculated with certainty;
• The net unpaid rent equals or exceeds a minimum amount, which equals seven days' rent (as at May 2026);
• The tenant must be in arrears of any net unpaid rent when control of the goods is taken.

What procedure has to be followed?

Only an enforcement agent can exercise CRAR on a landlord's behalf. In practice, there is very little difference between an enforcement agent and a certified bailiff. If a landlord wishes to proceed, they must authorise the enforcement agent in writing to use the CRAR process.

The landlord has to inform the agent of the date of the authorisation to proceed, their name and contact details, the name and contact details of any person authorised to act on behalf of the landlord if it is not the landlord themselves instructing, sufficient detail to enable the authorised person to identify the premises in respect which CRAR is to be exercised, the amount of rent owed by the tenant and the period for which the rent is owed.

What notice has to be given?

An enforcement agent may exercise CRAR only if the tenant has been given advance notice. Notice must be given at least 14 clear days before any entry is attempted. Clear days exclude Sundays, bank holidays, Good Friday and Christmas Day. There is no prescribed form of notice to be given, but the notice of enforcement must be in writing and must contain the following information:

• The name and address of the tenant;
• Any reference numbers;
• The date of the notice;
• Details of the court judgment or enforcement power pursuant to which the debt is enforceable against the tenant;
• Sufficient details of the debt to enable the tenant to identify it correctly, the amount of the debt, including any interest due as at the date of the notice, the amount of any enforcement costs that have been incurred and any potential additional costs if the sum outstanding is not paid;
• How and between which hours and on which days payment of the outstanding sum may be paid;
• A contact telephone number and address, and the days and hours on which the enforcement agent can be contacted, and the date and time by which the outstanding sum must be paid to prevent the tenant’s goods being taken control of and sold, and the tenant incurring additional costs.

How should any notice of enforcement be served?

It should be given by post, addressed to the tenant at the place or one of the places where the tenant usually lives or carries on business, or by fax or other means of electronic communication, or via delivery by hand through a letter box of the place or one of the places where the tenant usually lives or carries on business.

If there is no letterbox, it is sufficient to affix a notice of enforcement at or in a place where it is likely to come to the tenant's attention. A notice can be served on the tenant personally if the tenant is an individual. It is also sufficient to deliver the notice to the place or one of the places where the tenant carries on business, or to the registered office of the company or partnership if the tenant is not an individual. It would be best practice to use a method of service of the notice that allows you to prove the tenant's receipt.

Are there any time limits?

Yes, the enforcement agent must exercise CRAR within 12 months of the enforcement notice date.

The Court does have the power to extend the 12-month period in some circumstances.

How can the agent take control of the tenant’s goods?

The agent can secure the goods on the premises, remove them from the premises and secure them at a different location, or enter into a controlled goods agreement with the tenant.

What is a controlled goods agreement?

This is an agreement which used to be called a 'walking possession agreement’ where the tenant is permitted to retain custody of the goods on site, but they acknowledge that the agent has effectively taken control of the goods and agrees not to remove or dispose of them, nor to allow anyone else to do so before the debt is paid.

This allows a tenant’s goods to remain on that site but effectively places an embargo on them, so nothing can happen to those goods until the debt has been paid off. A controlled goods agreement must be in writing and signed by the enforcement agent and the tenant.

Are there limited hours around when CRAR can take place?

It can take place on any day of the week between the hours of 6am and 9pm, and the Court has the power to extend the hours for exercising CRAR if the tenant’s trade or business is operated outside of the hours of 6am to 9pm.

If a bailiff is going to re-enter the premises, a notice of re-entry has to be given to the tenant at least two clear days before it is due to take place.

Does the agent have a power to force entry?

Yes, the agent has a general power to use reasonable force to enter or re-enter the premises. They are only permitted to enter by any door or any usual means by which entry is gained, for example, loading bays, but not windows. After entering the premises, the enforcement agent must give the tenant a notice explaining what they are doing.

What goods is an agent able to exercise CRAR over?

This is defined broadly in the 2007 TCEA legislation as 'property of any description other than land'. An enforcement agent can only exercise CRAR over goods if they are on the premises that the enforcement agent has the power to enter, belong to the tenant, are situated in England and Wales, and are not exempt.

What are exempt goods?

This means items of equipment necessary for the tenant’s personal use in the tenant’s employment, business trade, profession, study, or education. This would include computer equipment and vehicles. This exemption only applies where the aggregate value of the items is up to £1,350. Items valued over this threshold can still be seized. The exemption also applies to clothing, bedding, furniture, household equipment, and provisions that the tenant reasonably requires to satisfy their basic domestic needs and those of their household.

It is unlawful to remove assistance dogs, sheep dogs, guard dogs, or pets; a vehicle with a valid disabled persons badge; a vehicle being used by a disabled person; or a vehicle displaying a valid British Medical Association badge.

Inventory of controlled goods

The enforcement agent has to give the tenant an inventory of the goods over which control has been taken as soon as reasonably possible. The inventory has to be in writing, signed by the agent and include details of the name and address of the tenant, the enforcement agents name and reference number, the date of the inventory, the name and address of any co-owner of controlled goods, the statement that the agent has taken control of the goods of the tenant or the goods co owned by the tenant, a list of the controlled goods with the description to enable them to be identified.

Controlled goods agreement

The agent does not have to remove the goods from the site when he takes control; instead, he can enter into a controlled goods agreement, which allows the tenant to retain custody of the goods while acknowledging that the agent has taken control. The tenant agrees not to remove or dispose of the goods until the debt is paid.

Again, a controlled goods agreement must be in writing, signed by the agent and the tenant, and contain specific information, including a list of the goods over which control has been taken, and a sufficient description of the goods to allow the tenant to identify them.

Valuation of the controlled goods

If the agent takes control of goods, they must obtain a valuation within 7 clear days of taking control. The valuation must be in writing, signed by the agent, provide a value for each item of goods, and be provided to the tenant and any co-owner of any controlled goods.

Sale of controlled goods

The agent has to sell or otherwise dispose of the goods at the best price reasonably obtainable. There is no definition of what the best price that can reasonably be obtained actually means, but reference would be made to a valuation if one of those has been obtained.

The 7-day period from the removal of the controlled goods must expire before any sale can take place. The sale can take place on the day after the removal of the controlled goods if the goods would become unsaleable, or their value would be extinguished or substantially reduced, if the 7-day7-day period is adhered to.

Notice of sale

A notice setting out the date, time, and place of the sale must be given to the tenant at least 7 clear days before the sale.

Notice of sale must be given within 12 months beginning on the day CRAR is exercised.

The controlled goods must be sold at a public auction unless the court orders otherwise.

Distribution of proceeds of sale

The proceeds of the sale must be used to pay the outstanding amount, which includes the debt and the recoverable costs of exercising CRAR.

Abandonment of controlled goods

The controlled goods will be deemed abandoned if the agent does not give the tenant a notice to sell within 12 months of the date of enforcement, or the goods remain unsold after their sale, and no notice of a further sale has been given.