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Forfeiture of a Business Lease.

January 6, 2012

Forfeiture of a Business Lease and Relief from forfeiture

Ian Carruthers of Liverpool Solicitors Carruthers Law writes as to forfeiture of business leases and relief from Forfeiture. If your business tenant does not pay his rent or does not comply with certain terms of his lease then you as his landlord will usually have a right under the terms of the lease of “forfeiture” this will enable you to cancel the tenancy.

Forfeiture is not an implied remedy it is normally expressly referred to under the lease. You will have to look carefully under what circumstances the lease can be forfeited. Usually however it is for non payment of rent or breaches of covenants, for example a failure to keep the commercial premises in a good state of repair.

You will have to check that the particular circumstances that your tenant maybe in breach of is covered under your lease and what procedure under the terms of the lease is to be followed.

For all breaches of covenant except for non payment of rent you have to give your tenant a notice of your intention to forfeit the lease under section 147 of the Law of Property Act 1925. If the tenant has breached the repair covenant you also need to have regard to the requirement of the Leasehold Property (Repairs) Act 1938.

Waiver

If you are looking to recover the premises it is important that you do not do anything which would be considered to be a waiver of the lease.

A waiver would be in view of the breach by your tenant you did something which unequivocally accepts the lease continuing. Examples of such would be:

  • Summoning, demanding and accepting rent;
  • Levying distress;
  • Negotiating or granting consents required under the lease;
  • Serving notice under the lease;
  • Serving statutory notices;
  • Serving an injunction for breach of covenant;
  • Arranging to inspect the premises;
  • Accept or negotiate a change in the lease;

It is therefore vital that if there is a breach by your tenant and you are intending to forfeit then it is important to take advice as how to proceed and advice as to any further steps you might take which might be considered to be waiver.

Some breaches are continuing breaches and some breaches are once and for all breaches. A continuing breach would be a failure to keep a premise in repair. A once and for all breach is something you could not have accepted such as non payment of rent or unauthorised subletting if you waive your right then you wont be able to forfeit.

But if you are to peacefully re enter then it is very important that it is done correctly. A failure to do so could lead to action against you. The best way of proceeding is to employ a private certificated bailiff to do the job. They will do so properly, legally and change the locks and serve the appropriate notices.

Relief From Forfeiture

It is open to the tenant to apply for relief from forfeiture to resume occupation. When the forfeiture has been for non payment of rent or service charge then on application to the court for relief from forfeiture it will be granted upon payment of those sums and the landlords costs.

Where the landlord has forfeited the lease pursuant to section 146 such as for repair the tenant is allowed to apply to the court for relief once he has been served with a 146 notice and the court has wide discretion to grant or refuse relief.

For advice on forfeiture of a business lease and relief from forfeiture call Carruthers Law today.