Service charges are the costs landlords incur by providing services to their building. The division of services charges between landlord and tenants may lead to disputes further down the line, if they are not mutually agreed upon in the lease. The landlord should ensure that the company let agreement specifies whether the charge is recoverable in advance or to be paid over a quarterly or annual basis. However, if landlords fail to determine what service charges the tenants should be paying for in the agreement, the tenants are not obliged to pay. If maintenance costs, cleaning costs and major works are included in the lease, and tenants fail to pay costs which are deemed reasonable, the landlord might take the case the First-Tier Tribunal (Property Chamber). If you find yourself in this situation, it’s essential to speak to property solicitors so you know what you’re entitled to.
Commercial Rent Arrears Recovery (CRAR)
If tenants fail to pay their rent, it can have a detrimental impact on a commercial landlord’s’ financial position. Commercial Rent Arrears Recovery (CRAR) came into force in 2014, to give landlords of business premises added protection, and help them collect rent arrears by taking control of the tenant’s goods. Certified Enforcement Agents and Bailiffs can execute warrants on your behalf for rent arrears on properties that are wholly commercial before the end of the lease. CRAR can only recover outstanding rent, and doesn’t include utilities, service charges or insurance. If you need legal advice to successfully recover rent arrears from your tenants, speak to a member of our team today on 020 3376 1888.
Forfeiture and possession
Landlords of commercial property can apply for ‘Forfeiture’ to effectively terminate the lease. The right to forfeiture can only be exercised if it is mentioned in the company let agreement. By following notice procedures, landlords can seize possession of their commercial property if they have evidence that the tenant has failed to pay rent. In these circumstances, you may choose forfeiture by peaceable re-entry and change the locks to regain possession. However, landlords should exercise caution before making this decision, and are advised to seek legal representation to avoid the costs of wrongful forfeiture or trespassing convictions.
If the tenant has breached other contractual terms of the agreement, for example, causing damage to the property, forfeiture is not possible without a served notice of at least one month before issue proceedings. If the breach is not remedied after this time, the landlord can decide to forfeit the lease by peaceable entry or through court proceedings. However, the landlord and tenant can also agree to end their contract before the fix term and ‘surrender the lease’ by operation of law. Tenants interests will be transferred back to the landlord by an ‘unequivocal act’ that shows both parties have accepted the termination of the agreement. The landlord may also agree to accept a financial premium to terminate a commercial lease before the fix term ends.
In most circumstances, a court order is the best way for landlords to gain possession of their commercial property as it gives them a greater degree of certainty. If you are considering repossession, you should seek legal advice from property solicitors immediately. Our legal team can assist you with serving notices, give you advice on peaceably re-entry and effect forfeiture. We understand that disputes with tenants can result in a long and costly legal process, which is why we also provide affordable payment solutions to make your legal fees as affordable and convenient as possible. For more information on how we can help you, give our legal specialists a call today on 020 3376 1888.
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