How to Recover Rent Arrears from Ex-Tenants

Recovering rent arrears from former tenants can be difficult to achieve with or without legal advice. Ex-tenants will often ignore letters chasing the arrears or simply disappear altogether. There is also the question of commerciality and cost; benefit. Tenants by definition can often not own assets. The risk of incurring costs in chasing bad debts needs to be kept in mind. 

Equally, tenant positions can change over time. It isn’t unusual, especially with commercial property, for a tenant to have other assets elsewhere and it can then be possible for landlords to pursue recovery in a way that makes good commercial sense. 

In order to bring a claim for rent arrears in commercial property, a landlord must serve a Section 17 notice on the tenant in the prescribed form within six months of the date the arrears first became due. A Section 17 notice under the Landlord and Tenants (Covenants) Act 1995 only applies to rent and service charges.

Failure to serve or issue the notice correctly makes it much more difficult for a landlord to bring a claim to recover the money.

Usually, rent arrears are recovered by obtaining either a High Court Order, or a County Court Judgment (CCJ). 

Before issuing court proceedings it is first necessary to review the position and confirm precisely who might be liable and responsible for the debt and arrears and to ensure there are no unforeseen issues. The tenant will most obviously carry a liability however it is increasingly common for a guarantor to also be obtained by a landlord at the outset before agreeing a tenancy. Any guarantor should be a property owner in England and Wales. Where such a guarantor is obtained the landlords prospects of recovering the debt significantly increase. It is also mostly the case that we are able to recover legal costs from either/both tenants or guarantors in these types of disputes. 

Following the initial review we will write to the tenant and guarantor setting out the detail of their liability including the debt, interest and costs. It can be necessary to follow the debt recovery protocol- a pre action protocol all parties must comply with before issuing court proceedings. 

After a reasonable period of time has elapsed, if the debt remains unpaid and there is no negotiated settlement, we would then review potentially issuing a/the claim. The court process would then be followed leading to Judgment.

When Judgment is in hand it is necessary to immediately secure that Judgment against assets including the property owned by the debtor or guarantor. Ultimately, if we need to, we can/will force sale of those assets to recover monies owed.