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Payment Predicated on Process

Published On: 11 February 2016

If a landlord wants to ensure it can recover a debt owed by its tenant from either a former tenant or a guarantor it must serve a s.17 notice. The notice must be served within a strict time limit of six months from when the debt accrues. If the notice is not served by the landlord within this period, the former tenant or guarantor may not be required to pay the debt.

A recent case highlighted this statutory requirement in circumstances where the previous tenant accepted liability without service of a notice by the landlord, and entered into a consent order where it agreed to meet the liability. Belatedly realising the landlord's mistake the former tenant then challenged the order made by the Court to pay the debt as (by that time) the time limit to serve a s.17 notice had expired.

Luckily for the landlord the Court rejected the argument and the former tenant was required to pay pursuant to the court order, but this case reminds us that it is essential to serve a s.17 notice on anyone who is liable within the six month period, even if an informal approach produces an agreement to pay the debt. This is especially so for repeat debts, which the former tenant or guarantor agrees to pay, as they fall due after service of the first notice.