All is not lost for landlords with tenants hit by administration
The nightmare of discovering that your tenant is in administration has become a reality for increasing numbers of landlords. David Ellis of Higgs & Sons' property insolvency team explains why now is not the time to panic.
The landlord's initial view will be a bleak one when first notified of the tenant's administration.
Typically the administrator will write to him explaining the position and pointing out that he has the benefit of a moratorium which means that none of the landlord's usual rights are enforceable against the tenant without the consent of the administrator or a court order.
However, all is not lost and it is important the landlord considers doing the following before anything else:
- Contacting the administrator as soon as possible to find out what his intentions are
- Providing full details to the administrator of any claim he has in the insolvency
- Testing the market and being prepared to negotiate with any buyer
- Checking the terms of any rent deposit agreement
- Checking whether the rent has been guaranteed by any third parties such as the directors of the tenant or its parent company
- Obtaining evidence of the condition of the property at the date of the appointment of the administrator
- Asking the administrator to consent to a surrender or forfeiture of the Lease.
Probably the most important point is that landlords should never conclude that the tenant's administration prevents them from taking any actions to protect their position.
If the right decisions are made, a landlord can maximise the sums received in the tenant's insolvency while minimising the cost and delays in the re-letting of the property.
If you require any further information or advice in relation to property insolvency please contact David Ellis directly on 01384 342 128.
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