June Quarter Day: Act now to keep former tenants and guarantors on the hook

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2 min read

As landlords will be well aware, the extension to the moratorium afforded by section 82 of the Coronavirus Act 2020 means that landlords will be unable to forfeit leases due to a tenant’s non-payment of rent until after 31 December 2020. Whilst there are some other options available to landlords, these are of limited application and many, such as CRAR, statutory declarations and winding up petitions, are subject to their own restrictions.

However, if a tenant has not paid its rent for a quarter, a landlord may be able to pursue a previous tenant or guarantor instead, as they are not protected by the ambit of the Coronavirus Act. To do this, the landlord must first serve a notice under Section 17 of the Landlord and Tenant (Covenants) Act 1995. Crucially, the rent which the landlord is trying to claim must not be more than 6 months old. This means that a landlord will not be able to claim any rent from a former tenant or guarantor unless a Section 17 Notice is served within six months of the rent becoming due. 

Due to the six-month limitation, a landlord’s ability to claim against a former tenant or guarantor for the March quarter has now passed. However, landlords are still able to serve a Section 17 Notice in relation to the June quarter rent if that is also unpaid provided they act quickly. 

If a landlord is concerned about how serving Section 17 Notices may be seen, then it can make clear in any covering letter that this is only being done to protect its position. Whilst the landlord may not have any intention of enforcing the arrears against a former tenant or guarantor, it will lose the right entirely unless a Section 17 Notice is served within six months of the sum falling due. As the current uncertainty looks set to remain into the winter, it would seem sensible for landlords and their agents to at least give themselves the option of recovering the June quarter’s rent from former tenant’s or guarantors by serving Section 17 Notices in good time before 23 December 2020. 

If you would like advice on tenant non-payment, landlord and tenant disputes or any other property disputes, please do get in touch.

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