Forfeiture – top tips for commercial tenants

Forfeiture is a legal process through which a landlord can terminate a tenancy and regain possession of a premises. This can be a distressing situation for a tenant, but relief may be available to remedy the situation.

Further to our article for landlords, we have pulled together our ‘top tips’ for tenants whose leases have or may be forfeited:

Do:

• Check the forfeiture clause in your lease: review this clause with a lawyer to determine whether the landlord has a legitimate right to forfeit the lease. Common grounds for forfeiture include rent arrears, breach of covenant or non-performance of lease obligations
• Act promptly: if you have received a notice of forfeiture – pursuant to Section 146 of the Law of Property Act 1925 – take swift action. This notice will often give a tenant time to remedy a breach or pay arrears, but it often needs to be acted upon within a strict timeframe
• Consider remedying the breach: if the forfeiture is due to a specific breach – such as non-payment of rent – make arrangements to rectify the breach immediately. Pay any outstanding rent, make right any disrepair or take other corrective action within the given period.
• Consider relief from forfeiture: tenants can apply to court for relief from forfeiture which can allow for a lease to be reinstated. The court may grant relief if a tenant remedies the breach – such as settling any rent arrears – and can satisfy the court that it would be unjust to allow the forfeiture to stand.

Don’t

• Ignore a forfeiture notice: ignoring a forfeiture notice can lead to a landlord taking further legal action, such as changing the locks or applying to the court for possession
• Assume you can walk away from liability: you could still be liable for outstanding rent arrears or other sums which fall due under the lease even if you abandon the premises
• Delay in applying for relief from forfeiture: if you believe the forfeiture was unjustified or you have remedied the breach, you should apply for relief as soon as possible. The court may be more likely to grant relief when there is a timely application and significant delays could harm your case
• Assume the lease is automatically terminated: even if a landlord has served a notice to forfeit the lease, it does not automatically end unless the landlord takes some further steps. In some cases a tenant can reinstate the lease or resolve the issue, depending on the nature of the breach and the landlord’s response.