When a tenant fails to pay rent or breaches the terms of their lease, landlords may wish to recover possession of their premises as quickly as possible. One of the most powerful remedies available to a commercial landlord is forfeiture, which allows the landlord to bring the lease to an end and recover possession of the property.<\/p>\n\n\n\n
However, forfeiture is not an unrestricted right. This article considers when a commercial landlord can forfeit a lease, whether court proceedings are necessary and the potential risks involved.<\/p>\n\n\n\n
A commercial lease will commonly contain a forfeiture clause, also known as a proviso for re-entry, allowing the landlord to terminate the lease if specified events occur. These may include:<\/p>\n\n\n\n
Importantly, it is not enough for a landlord to forfeit a lease because a tenant has breached an obligation, the lease must contain a valid right of re-entry clause and the landlord must comply with the applicable statutory requirements outlined below.<\/p>\n\n\n\n
In certain circumstances, a landlord can forfeit a commercial lease without first obtaining a court order. This is commonly achieved through peaceable re-entry, where the landlord takes possession of the premises, typically by changing the locks, while ensuring that no breach of the peace occurs.<\/p>\n\n\n\n
However, this method carries risks. If the tenant or another person disputes the landlord’s entitlement to possession, attempting to force entry or using violence or threats may constitute a criminal offence.<\/p>\n\n\n\n
If a landlord re-enters the property, even if they do so peacefully, after waiving its right to forfeit, the re-entry will be unlawful. This may expose the landlord to a claim for trespass and an order reinstating the tenant. In practice, landlords should avoid any dealings with the tenant that could be read as affirming the lease once they have decided to forfeit.<\/p>\n\n\n\n
Where there is a risk of confrontation, or where the landlord is uncertain about its entitlement to forfeit, court proceedings for possession may be the safer option.<\/p>\n\n\n\n
One of the most significant risks for landlords is inadvertently waiving their right to forfeit.<\/p>\n\n\n\n
Waiver occurs where a landlord, with knowledge of the tenant’s breach, unequivocally recognises the continued existence of the lease. For example, where a landlord becomes aware that rent is overdue but subsequently demands or accepts rent which fell due after the breach, this may amount to waiver, and the landlord may lose the right to forfeit in respect of that particular breach.<\/p>\n\n\n\n
Landlords should carefully consider their communications with tenants and avoid taking steps that could be interpreted as recognising the continuation of the lease<\/p>\n\n\n\n
Where the landlord seeks to forfeit a lease for a breach other than non-payment of rent, section 146 of the Law of Property Act 1925 <\/a>will generally require the landlord to serve a notice on the tenant before exercising its right of re-entry.<\/p>\n\n\n\n The notice must:<\/p>\n\n\n\n The landlord must give the tenant a reasonable opportunity to remedy the breach where it is capable of being remedied. For example, if a tenant has carried out unauthorised alterations, the landlord should allow the tenant to reinstate the premises in accordance with the lease. If the tenant fails to do remedy this breach within a reasonable time period, the landlord may be entitled to exercise its right of re-entry.<\/p>\n\n\n\n There are important exceptions and additional statutory requirements, particularly in relation to breaches involving non-payment of rent and certain breaches of repairing obligations.<\/p>\n\n\n\n Non-payment of rent is one of the most common grounds for forfeiture of a commercial lease. Unlike other breaches of covenant, a landlord will generally not need to serve a section 146 notice before forfeiting for non-payment of rent. <\/p>\n\n\n\n However, the landlord must still ensure that the lease permits forfeiture for the relevant default and that any applicable contractual requirements have been satisfied. Before exercising the right of re-entry, landlords should also consider whether they have waived their right to forfeit.<\/p>\n\n\n\n Even where a landlord has validly exercised its right to forfeit, the tenant may apply to the court for relief from forfeiture. Relief from forfeiture is an equitable remedy which allows the court, in appropriate circumstances, to restore the lease and reinstate the tenant’s occupation. In cases involving rent arrears, the Court may grant relief where the tenant pays the outstanding rent, interest and the landlord’s recoverable costs. <\/p>\n\n\n\n The availability of relief will depend on the nature of the breach and the relevant statutory and equitable principles. A landlord should therefore be aware that recovering possession through forfeiture does not necessarily bring the dispute to an immediate conclusion.<\/p>\n\n\n\n Before taking steps to forfeit a commercial lease, landlords should:<\/p>\n\n\n\n Forfeiture can provide commercial landlords with an effective remedy where tenants fail to comply with their contractual obligations. However, the process is subject to strict legal requirements, and mistakes can result in the loss of the right to forfeit or costly litigation.<\/p>\n\n\n\n Landlords should obtain legal advice before taking enforcement action to ensure that their rights are properly protected and that the appropriate procedure is followed.<\/p>\n\n\n\n If you are a commercial landlord experiencing difficulties with a tenant, or require advice on forfeiture and recovering possession of commercial premises, RFB Legal’s property litigation team can assist.<\/p>\n\n\n\n Senior Litigation Partner David Burns has extensive experience dealing with disputes relating to bridging loans. For enquiries on this topic, please contact David Burns via email d.burns@rfblegal.co.uk<\/a> or direct dial 0207 467 5751.<\/p>","protected":false},"author":23,"featured_media":10997,"parent":0,"menu_order":0,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[20],"tags":[81],"class_list":["post-10973","insight","type-insight","status-publish","format-standard","has-post-thumbnail","hentry","category-property-litigation","tag-litigation-team-dj"],"acf":[],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n
Can a Landlord Forfeit a Lease for Rent Arrears?<\/h2>\n\n\n\n
Does Forfeiture Always End the Tenant\u2019s Right to Occupy the Premises?<\/h2>\n\n\n\n
What Should Commercial Landlords Consider Before Forfeiting a Lease?<\/h2>\n\n\n\n
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Sonu\u00e7<\/h2>\n\n\n\n
Bize Ula\u015f\u0131n \u2013 Dava \u0130\u015fleri K\u0131demli Orta\u011f\u0131 David Burns<\/h2>\n\n\n\n