Many commercial leases in Scotland are registered in the Books of Council and Session. For arrears, a registered lease has the same authority as a court judgement. As a consequence, a landlord has a variety of effective enforcement options. None of those options, other than winding up, have been affected by the Coronavirus legislation that has been passed or is currently in bill format. Technically these are – and always have been – available to landlords.

However, the enforcement options need to be served by messengers at arms. Until now, the messengers and sheriff officers have been closed for all but certain urgent business.

On 3 June 2020, the Society for Messengers at Arms and Sheriff Officers provided detailed advice to their members on ‘returning to normal’. This is based on the Scottish Government’s publication ‘COVID-19 – Framework for Decision Making – Scotland’s route map through and out of the Crisis‘.

The advice sets out a phased return for messengers and sheriff officers over five stages, from Lockdown to Phase 4, with the caveat of adhering to official government advice at each stage.

Phase 1 – arrestments, inhibitions and charges

We are past lockdown and now in phase 1 for Scotland. This means that messengers and sheriff officers can serve court papers, carry out arrestments, inhibitions and serve charges for payments.

In broad terms:

  1. An inhibition stops a tenant selling or leasing property it owns in Scotland until the arrears are cleared;
  2. An arrestment allows a landlord to freeze any money in a tenant’s Scottish bank account or owed to a tenant by a third party in Scotland eg a sub-tenant. That money has to be paid to the landlord; and
  3. A charge for payment gives the tenant 14 days to pay the arrears, failing which, the landlord can apply to the court to wind up the tenant or carry out a goods or a money attachment.

For commercial landlords with registered leases and arrears, they are likely to now instruct arrestments and charges for payments. Inhibitions are only useful if the tenant is also a landowner in Scotland.

Phase 2

Messengers and sheriff officers can serve money attachments and goods attachments on commercial tenants. As more tenants re-open, money and goods attachments are likely to be frequently used by landlords.

Phase 3 does not affect commercial tenants and Phase 4 is essentially a return to the way business was before coronavirus.

Conclusion

As a consequence of Covid, commercial landlords have had a number of their enforcement remedies removed by legislation. Some of the options to recover arrears in Scotland have now effectively been reawakened with the opening of messengers at arms and sheriff officers. That is good news for landlords, especially because the May quarter date has just passed. Not so good news for tenants.

Contributor

Matt Farrell

Partner