The landscape continues to change for commercial landlords in Scotland, as the remaining pandemic-related restrictions on recovery of rent arrears are lifted this month.
Both landlords and tenants have had to keep up with a lot of legal changes in the last two years.
A number of measures were implemented, at the start of the pandemic, which restricted the action landlords could take to recover arrears from tenants. These restrictions have gradually been eased and landlords will be pleased to hear that those restrictions which remain are to be lifted later this month.
So, what will the position be in Scotland once the final restrictions are lifted?
From the end of March 2022, landlords will once again have a full set of recovery tools at their disposal.
Let's have a quick reminder of the recovery options most frequently used by commercial landlords, all of are - or shortly will be - available once more.
Summary diligence
Where leases contain the necessary consents, terms allowing identification of the sums payable, and have been registered in the Books of Council and Session for preservation and execution, landlords can carry out what is known as summary diligence.
This means that immediate steps can be taken to recover arrears – without the need for court action – including by:
- serving a charge for payment;
- carrying out an arrestment of funds or moveable property owned by the tenant in the hands of third parties (including banks); and
- executing an attachment of goods, equipment or money owned by the tenant.
Court proceedings
Where the lease does not allow for summary diligence to be carried out, landlords may nevertheless raise court proceedings for payment of arrears and, once an order for payment has been obtained, proceed to enforcement (the methods of which can again include serving a charge for payment or carrying out an arrestment or attachment).
Importantly, from the end of this month, landlords will once again be able to present winding up petitions against commercial tenants on the basis of statutory demands which have been served in respect of arrears and which are unsatisfied.
Irritancy
As mentioned in our blog a few weeks ago, from 29 March 2022, the notice period to be given to a commercial tenant before a landlord can terminate the lease for non-payment of rent or other sums will revert from 14 weeks to 14 days.
What about the Commercial Rent (Coronavirus) Bill?
You may have heard quite a bit in recent weeks about the Commercial Rent (Coronavirus) Bill, which is due to come into force in England and Wales shortly. The Bill, amongst other things, ring-fences and introduces a regime for arbitration of rent arrears which were accrued during the pandemic. For the avoidance of doubt, the Commercial Rent (Coronavirus) Bill does not apply in Scotland. For information relating to the lifting of restrictions in England & Wales, please see our blog here.
If you require advice in relation to enforcement action available to commercial landlords, please do not hesitate to get in touch with our Real Estate Disputes team or your usual Brodies' contact.
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