Commercial Tenant is Arrears

[wellzee]

Afternoon all

I was hoping someone might be able to offer some advice on the following situation: My company owns a building that has a commercial tenant on the ground floor (a pub) with residential above. The commercial tenant is now almost 6 months in arrears and shows no sign of paying. If you're wondering why we've given him so long with just 'reminders' we have mutual friends, and whilst he has slipped behind in the past, his business is hugely reliant on student trade so he usually covers the shortfall when the students come back. Unfortunately this year that hasn't happened and he is now ignoring my phone calls.

I am used to dealing with residential tenants but not commercial - what is the correct procedure in dealing with this? Who is the best person for me to contact first - our solicitors? A debt collecter? A locksmith??! (I'm pretty sure the law on changing the locks changed a couple of years ago).

Any knowledgeable guidance would be really greatly appreciated.

[Dr Interceptor]

Does the commercial tenant also rent the residential flat, or are they separate entities?

I would always seek legal advice in such circumstances, however in theory you can:

- Issue a notice of default giving a time period to bring rent arrears up to date (28 days)
- After that date, and if you have the keys, enter the property when it is empty (no people inside)
- Change the locks
- Display a notice on the front doors/windows of the property to say you have forfeited the lease by peaceful re-entry, and that the locks have been changed. You will also need to state the date, reason (rent) and also that the lease is now terminated.

There are bailiffs that specialise in taking possession of commercial properties... they will also handle the removal of any personal items from the premises and the lock smiths, and ensure all notices are legally compliant.

You would then be able to pursue the individual through the courts for the rent, and the costs of eviction.

If he lives in there though, you cannot evict, you can't make someone homeless. That would be one for the courts.

[Simpo Two]

Do you want to the money or a new tenant?

[Dr Interceptor]

Simpo Two said:

Do you want to the money or a new tenant?

Fair point... can't imagine pubs are the easiest thing to let.

[PurpleMoonlight]

Do you have a written lease in place?

If so, it will likely have a right to Forfeit clause in it if rent is in arrears. Just the threat of invoking this often persuades the tenant to cough up.

Not always though, I just had one do a runner when 4 months in arrears.

[surveyor]

Not forgetting that if you take back the lease you will also get the rates liability. 3 months free then full whack assuming it's vacant.

[wellzee]

Thank you very much all for the advice, it is really helpful. I finally received a message from the tenant this evening for a call tomorrow, so will see how that goes.

FYI the commercial tenant does not live on the premises.

[Chrisgr31]

For rent arrears you can just instruct a civil enforcement agent (new terminology for a bailiff). All the big ones will do this sort of work, and charges are fixed in law as well. £75 for a letter as compliance, £235 (I think) plus 7.5% of the debt for a visit!

[Johnniem]

On the commercial unit you need to refer to the lease, as stated above. I suspect that a S146 notice will need to be served and pinned to the door if not served in the hand. If a 146 notice is served, (that will depend on whether it is a lease or a licence - they are very different in the rights provided to each party) then the tenant will have a right to relief but will need to apply to the court. It will very much depend on what rights the lease/licence gives you. If the occupation is purely on the basis of a handshake then lets hope that the handshake meant something and the landlord (tenant of the pub) is more than what the law will call 'a man of straw'.

[Johnniem]

Dr Interceptor said:

Fair point... can't imagine pubs are the easiest thing to let.

Quite difficult actually but perhaps resi development or a restaurant, if the pub serves hot food of course otherwise a change of use may be required.