Buyer’s contract negotiation guide—arrears

Copyright © 2025 LexisNexis
Published by a LexisNexis Property expert
Practice notes

Buyer’s contract negotiation guide—arrears

Copyright © 2025 LexisNexis

Published by a LexisNexis Property expert

Practice notes
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Arrears Due diligence for buyers

Arrears are sums due from Tenants which have not been paid to the seller as at completion (including any VAT in respect of such sums). The seller should expect to provide a statement of arrears (if any) and a rent payment history (the usual period is three years) with the replies to Commercial Property Standard Enquiries and then update the arrears statement just before exchange and completion. Buyers should review and look out for the following:

Arrears where there is a single lease of whole

If the property is subject to a single lease of whole then the existence of arrears might suggest concerns about tenant covenant strength or a dispute. The buyer’s solicitor should raise enquiries and report to the buyer.

If the arrears are not high and do not signify any payment issues then the buyer may sometimes be prepared to pay over the arrears to the seller at completion and thus have a clean break. This is not standard but does happen from time to time.

How old are the arrears?

If

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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Arrears definition
What does Arrears mean?

Sums reserved in a lease which a tenant fails to pay on the due date. A right to forfeit may be reserved in a lease once sums have been outstanding for a specified period of time.

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