The Right to Recover from Undertenants: Use It (Promptly) or Lose It
Published 29 September 2014
You may already be aware that if your tenant is in arrears, you have the right to serve notice on any undertenant of the property requiring the undertenant to pay its rent directly to you until those arrears are cleared
Landlords seeking to exercise this right may need to act quickly – and particularly so since the recent changes implemented by the Commercial Rent Arrears Recovery procedure (CRAR) which came into force in April. Those changes make provision for a new grace period of 14 days from service of the notice on the undertenant before the notice becomes effective. If you serve notice on the undertenant less than 14 days before a quarter day, for example, you will be out of time to require the undertenant to make that quarter's payment to you and may have to wait another full quarter before you can begin receiving monies.
If you have a defaulting tenant and a solvent undertenant, be aware of any forthcoming payment dates in the underlease and make sure that you take action as promptly as possible.