- Commercial tenancies are governed largely by the lease, not by protective legislation.
- Distress and termination are alternatives, not a sequence.
- Seizing goods for arrears generally affirms the lease.
- Re-entry ends the tenancy and can end the claim for future rent.
A different regime from residential
Commercial tenants have very little statutory protection. The Commercial Tenancies Act deals mainly with mechanics such as distress and forfeiture; it does not regulate rent or restrict termination the way residential legislation does.
The consequence is that the lease governs. Remedies, notice periods and cure rights are whatever the document says they are.
That cuts both ways, and it is why both landlords and tenants should read the default provisions before a default rather than during one.
Distress
Distress is the seizure of the tenant’s goods on the premises to satisfy rent arrears. It is a self-help remedy with strict procedural requirements.
The critical consequence is that distraining for arrears generally affirms the lease. A landlord that seizes goods has, in effect, elected to continue the tenancy and cannot then treat it as terminated for the same default.
There are also limits on what may be seized, and third-party goods on the premises create real risk. Distress conducted improperly exposes the landlord to a claim.
Termination and re-entry
The alternative is to terminate the lease and re-enter, ending the tenancy and recovering possession.
This forecloses distress for the same arrears, and depending on the lease and the circumstances it can limit the claim for future rent. A landlord that terminates may recover arrears to the date of termination and damages, but the position on the balance of the term depends on the drafting and on mitigation.
Leases increasingly contain provisions intended to preserve a claim for future rent after termination. Whether they achieve it is a question of construction.
Choosing
The decision usually turns on the market. Where the premises will re-let quickly at a comparable rent, terminating and re-letting is often better than pursuing a failing tenant.
Where the premises are hard to re-let, keeping the tenant in place and pursuing arrears may preserve more value, even if the relationship is poor.
Where there is a personal guarantee from the principals, the calculation changes again, because there may be a solvent party to pursue regardless of what happens to the tenancy.
This is a decision worth taking advice on before acting, because the first step taken often forecloses the alternative.
Common questions
Can a commercial landlord lock out a tenant?
The Commercial Tenancies Act provides for re-entry in defined circumstances. Doing it wrongly exposes the landlord to a claim, so advice before acting is sensible.
Can we distrain and also terminate?
Generally not for the same arrears. Distress affirms the lease; termination ends it.
What about goods belonging to someone else?
Third-party goods on the premises are a recognised risk in distress and can produce claims against the landlord.
Does a personal guarantee survive termination?
Frequently yes, depending on the wording. It is often the most valuable remedy available.
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