What are the options landlords and their solicitors have open to them when their tenant – residential or commercial - absconds owing rent? But will it be worth your while?
New streamlined procedures that make it easier for landlords to use a High Court Enforcement Officer (HCEO) to evict residential tenants came into force on 23rd August 2020.
Is it worthwhile?
The key question here is whether you believe the absconded tenant has the money to pay the rent arrears or whether they have assets of sufficient value that could be taken into control during enforcement and sold at auction to recover the debt.
If they do not have sufficient assets, then you may want to consider whether any action you take will actually result in payment. Given that the tenant has absconded leaving arrears, assets may be thin on the ground.
Assuming you decide the debt is worth pursuing, your first step will be to locate the tenant.
There are some sources of information publically available, such as the electoral roll, Companies House, directory enquiries, but these may take some time before they are updated.
A professional trace may be your best option for locating the tenant for residential property or the business that was in your commercial property, as the tracing company will have access to a far wider source of data.
You can read more about tracing in this article.
Debt collection or judgment?
To progress with the collection you could instruct a debt collection agency to recover the debt. They will write and call the debtor to request payment; they may even visit the debtor to discuss the matter (but they have no enforcement powers).
However, if your tenant has already disappeared once, you may decide to proceed straight to court action by applying for judgment. This will normally be in the County Court.
Provided judgment is awarded, the former tenant will be given a set time period in which to pay, normally 14 days.
Once you have been awarded judgment, you can also apply to court for an order for information, where the debtor will be instructed to answer your questions, for example about what assets they have.
Can CRAR be used to recover the debt?
CRAR – Commercial Rent Arrears Recovery – is an option available to commercial landlords to recover unpaid rent from their tenant. It may only be used against goods on the demised premises – if your tenant has left the demised premises, you may not use CRAR under these circumstances.
If the tenant does not pay the judgment debt within the time frame, you can transfer the judgment to the High Court for enforcement by a High Court Enforcement Officer (HCEO)
This is done using form N293A and there is a court fee of £66, which is recoverable from the debtor, along with the debt, judgment interest and enforcement costs if enforcement is successful. If it is not possible to enforce, you will only pay a Compliance Fee of £75 plus VAT.
Once the transfer is complete, the writ of control will be issued and enforcement action will commence. You can read more about the stages of enforcement in this article.