What to do if your tenant fails to pay the rent or is in breach of a significant term of a commercial lease

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Forfeiture is the most common method used by landlords for ending commercial leases when the tenant is in breach of the lease.

However, caution must be taken before doing so as generally a lease cannot be forfeited unless there is non- payment of rent. It is important to study the terms of the lease and to obtain legal advice as to what is defined under the terms of the lease as rent. Further, there must be a clause in the lease giving the landlord the right to forfeit and setting out when he/she can do so say for a breach such as not paying rent or any other very serious breach of the lease.

Usually with other breaches of the terms of the lease the landlord would need to serve the tenant with a notice under Section 146 of the Law of Property Act 1925. The notice should state exactly what that breach is and must give the tenant a set period of time in which to rectify the breach.

Should the tenant fail to comply with the notice and rectify the breach within the set time period he will continue to be in breach of the lease. In these circumstances it is open for the landlord to pursue forfeiture of the lease through the court.

Forfeiture can be effected by peaceable entry or via court proceedings. Forfeiting the lease by changing the locks without a court order can be very risky and may result in an application being made to court for relief from forfeiture by the tenant plus a possible damages claim.

It is important that the correct procedures are followed to avoid an application by the tenant for relief from forfeiture.

Further, at no time must the landlord waives his right to forfeit the lease. If the landlord does anything that acknowledges to the tenant that the lease is continuing then act will waive the landlord’s right to forfeit. If there has been a waiver and the landlord proceeds to forfeit the lease the tenant may be entitled to bring a claim for wrongful forfeiture and seek damages.

There are many pitfalls when attempting to forfeit a lease and specialist advice should always be sought before doing so. The decision to forfeit or terminate a lease must be taken very carefully with specialist legal advice as Forfeiture is not always the best option.

We at Quinn & Co specialise in property litigation and have a wealth of knowledge to guide clients and to assist them in this area of law. We also advise tenants who are on the receiving end of attempts to forfeit their lease.

Should you need to discuss any Landlord & Tenant matter please contact Joseph Quinn on 01392 248858.

This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such.



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