A landlord can forfeit a lease by either peaceable re-entry of the property or by issuing forfeiture proceedings at court.
Where a right to re-enter a property has arisen, a landlord must make sure it complies with the rules regarding exercising such a right.
Conditions of re-entry
The conditions of re-entry are usually as follows:
- The insolvency of the tenant or guarantor;
- Non payment of rent;
- Breach of a condition or covenant in the lease.
A landlord is not entitled to re-enter the commercial property by either peaceable re-entry or by forfeiture proceedings until such time as:
- The landlord has served what is known as a Section 146 Notice on the tenant.
The Section 146 Notice must set out the breach complained of, require the tenant to rectify the breach and require the tenant to pay monetary compensation to the landlord.
- The tenant has failed to rectify the breach and pay the compensation requested.
It is not necessary to serve a Section 146 Notice is the case of non payment of rent.
Where a landlord does want to forfeit the lease, the landlord needs to make sure it does not inadvertently waive its right to forfeit the lease. What is meant here is that where a landlord is aware of a breach under which the lease could be forfeited, but chooses to take no action at that time. The tenant could then argue that the landlord waived its right to forfeit the lease and the lease continues to exist.
Tenants relief from forfeiture
A landlord must be aware that a tenant can apply for relief from forfeiture. A tenant may do so at anytime whilst the landlord is proceeding to re-enter the property.
Where the court believes relief should be granted to the tenant, the court can grant relief on whatever terms it deems fit. Once relief is granted, the effect of this is that the lease never ended.
For specialist advice on forfeiture or any other landlord and tenant matter please contact Mark Fagan on 0113 320 500 or e-mail him at firstname.lastname@example.org