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Forfeiture of a commercial lease - key points



Mon 25 September 2023 Forfeiture of a commercial lease - key points

Solicitors for lease forfeiture

In simple terms, forfeiture is where, by court action or peaceable re-entry, the lease is lawfully terminated by the Landlord based on fundamental breach of the lease agreement. The starting point before considering forfeiting should be checking the terms of the lease to check the type of breach of lease by the tenant is covered as an express right for you to forfeit and then to consider whether forfeiture is the best option for you (see below).

Our property dispute solicitors are highly experienced in advising Landlords and Tenants on breaches of lease, forfeiture and the best way to proceed legal, commercially and tactically.

 

Forfeiture for non payment of rent

This is the most common reason for forfeiture and typically gives the Landlord having the option to re-enter the premises without a court order. However, it’s important always to check your lease and you may still need to serve formal notice on the tenant before forfeiting. We also strongly recommend you consider and check the history of  the tenant paying rent. If there is a history of late payment, the tenant may argue that you have waived your right to forfeit based on non-payment.

Entering without a court order is technically known as peaceable re-entry. The Landlord will need to change the locks and place a prominent notice outside the premises. You cannot use violence to enter the premises so the best option is normally to peaceably re-enter when you know the tenant is unlikely to be there.

Forfeiture for other breaches of lease

Start by checking the terms of your lease. Assuming the breach is a major breach such as alterations without consent or unlawful sub-letting or underletting, you will need to service a specific form of notice such as a section 146 notice before taking further action. This notice will specify the breach you allege and give the tenant the opportunity to remedy the breach. Only if the tenant doesn’t comply will you then have the option to apply to the court for an order for forfeiture.

Relief from forfeiture

The risk associated with peaceable re-entry without a court order is that the tenant will apply to the court for relief from forfeiture. The basis of an application for relief for forfeiture may be :-

Generally, tenants must apply quickly after forfeiture, for both practical and legal reasons, since delay will often mean significant damage to the tenant’s business and delay is generally inconsistent with having good grounds to reverse the forfeiture.

Is forfeiture the right option?

As a landlord, when you don’t receive rent or the tenant commits a breach such as unlawful sub-letting or altering the premises, it’s understandable to want the tenant out immediately. However, replacing 1 problem with another problem and/or losing more money isn’t a good choice either. Things to carefully weigh up as Landlord usually include :-

 


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Legal 500
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Law Society Personal Injury
Modern law awards winner 2023
Law Society Conveyancing Quality
The British Conveyancing Awards - Rebecca Kelly
The British Conveyancing Awards - Mustafa Hassan
ISO 27001
ISO 9001
LEAP Modern Law Conveyancing Awards
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