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RECOVERING ARREARS: LEVYING DISTRESS
(LEASES OF COMMERCIAL PREMISES ONLY)
A landlord/certificated bailiff can enter the demised premises
and seize a tenant's goods. If the tenant enters into a walking
possession agreement, the goods can remain on the premises.
Alternatively, the goods can be removed and stored elsewhere.
The goods can either be held until the tenant pays the arrears,
or sold and the proceeds of sale used towards the arrears.
A landlord is not entitled to levy distress where:
| - the sums owed by the tenant are not expressly reserved
as rent by the Lease; |
| - there is no subsisting landlord and tenant relationship
(e.g. the lease has been forfeited or surrendered); or |
| - the landlord has obtained judgment for the arrears. |
Goods can be sold for the best price once 5 days have passed
since the distress was levied and notice given to the tenant.
The tenant may extend this to 15 days if it gives security
for any additional costs which may be incurred by the landlord.
Advantages:
+ May give relatively quick cashflow.
+ Puts significant pressure on tenant.
Disadvantages:
- Distress could restrict the tenant's ability to trade, possibly
causing the tenant further financial difficulties.
- Complex rules limit the use of the remedy.
- Storage and insurance of the goods may need to be arranged.
- Risk that distress breaches the Human Rights Act 1998.
For further information or advice please contact propertylitigation@charlesrussell.co.uk
These notes represent only an outline summary
of relevant principles and detailed advice should always be
sought in particular cases.
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