Can my landlord legally forfeit my commercial lease?

A commercial lease usually includes the right for your landlord to peacefully re-enter the property and change the locks if you, as the tenant, have breached any conditions of the lease. Most usually this is due to failure to pay rent. Once your landlord has secured access, the lease is terminated. The process is known as forfeiture and is attractive to landlords, as it doesn’t require going to court.

 

Why might my landlord be forfeiting my lease?

The most usual reason is failure to pay rent and your lease will specify how long after missing a payment you have, until any forfeiture provision may kick in.

 

Other reasons include:

• Regular failure to pay your rent due to cashflow problems. Communicating with your landlord is key in this situation, as you may be able to resolve it amicably.
• The breach of another condition of the lease. If so, your landlord must first serve notice that you have breached this condition, giving you a short period of time to remedy the situation before proceeding to forfeiture.
• Your company has gone into administration, or you have entered into a Company Voluntary Arrangement. There is a moratorium on legal action, including enforcement, when a business is in administration. Your landlord will need permission from the administrator, or the court to forfeit the lease during this time.

 

Can a landlord lose the right to forfeiture?

Yes, if you have breached the lease in ways other than failure to pay rent, your landlord should give you a period of time to remedy the situation. Once you have done this, they cannot then forfeit the lease. Similarly, if after becoming aware of a breach they try to continue the tenancy, for example by accepting or demanding rent or carrying out repairs while you are still in occupation and in arrears, they waive their right to forfeiture. If your landlord has incorrectly forfeited your lease, you may wish to claim for relief from forfeiture, criminal liability or loss of income.

If part of the premises is residential, your landlord will not be able to make a peaceable re-entry unless the residential part is no longer occupied. If residential parts are still occupied, they will need to bring court proceedings for possession or risk facing criminal liability.

 

How can I regain access to the premises?

By making an urgent application to the court for relief from forfeiture. This must be done within six months of the date the lease is forfeit. You will be required to show that any rent arrears have been settled. In this situation, you should work with a specialist Commercial Property Solicitor who will negotiate on your behalf, to remedy the situation between you and your landlord and make a new agreement.

Forfeiture can be a frustrating procedure and as with all disputes between landlord and tenant, early intervention is key. The earlier you take expert legal advice the more likely you are to resolve the issue swiftly and lessen the financial cost.