A commercial landlord has the right to forfeit a lease where a tenant is in breach of a covenant.
A tenant’s security of tenure is protected by legislation however the landlord’s right to terminate the lease by exercising the right of forfeiture is preserved within that legislation (Landlord and Tenant Act 1954).
The right to forfeit and re-enter premises is essentially contractual and there must be a clause to that effect within the lease.
For all breaches other than rent arrears there is a formal procedure to be followed before forfeiture can take place (Section 146 Law of Property Act 1925).
Rent arrears are specifically excluded from the section 146 procedure however the landlord must formally demand the rent prior to forfeiture unless the lease makes it clear that no demand is necessary. In practice we would usually recommend that a formal demand be made.
In rent arrears cases it is also important to check the lease to establish how long the rent must be unpaid before forfeiture can be carried out. Most modern leases contain a clause for forfeiture and re-entry subject to rent being unpaid for either 14 or 28 days.
Exercising a right of forfeiture and re-entry demonstrates a landlord’s intention to terminate the lease and can be effected in 2 ways:
Peaceable re-entry is only available in the case of a breach of the covenant to pay rent. All other claims for forfeiture for breaches of covenant must be pursued via the courts following service of any appropriate notices.
Once forfeiture has been effected there is provision for the tenant to apply to the court for relief. In most cases the courts will grant the tenant relief from forfeiture provided the tenant has rectified the breach e.g. paid any rent arrears in full, together with interest and any costs due.
The law surrounding forfeiture of a commercial tenancy is a complex area of law. There are procedural issues that must be followed or there is a risk that a landlord will lose their right to forfeiture and a tenant will lose their right to relief. Our lawyers are experienced at guiding client’s through this process, taking the necessary procedural steps and advising upon the do’s and don’ts that can affect the claim.
Our Dispute Resolution Team