Where a commercial tenant is in arrears on the rent, forfeiture is an option often used by landlords.

If you are commercial landlord anxious to ensure you don’t make a costly mistake when forfeiting a lease and retaking possession, please do contact us. We are specialist solicitors.

Check the lease first

Most commercial leases have forfeiture provisions. If, as landlord, you don’t follow your own contractual procedures in the lease you will be in breach of contract yourself.

The same principle applies where forfeiture is something you want to consider for a breach other than rent arrears, such as unlawful use of the premises or unlawful alterations. If the lease does not allow forfeiture, you are unlikely to be able to lawfully terminate for breaches which are not financial.

Section 146 Notice

A Section 146 Notice is the required form of notice to be given to the tenant notifying the tenant of the alleged breach and intention to forfeit.

Some commercial landlords attempt to forfeit the lease by simply changing the locks without a court order. This is very risky legally and there should be very strong reasons for doing so. The main risk associated is that the tenant may apply to court for an order for relief from forfeiture and may also claim damages for losses.

Surrender of lease instead of forfeiture of lease?

In most situations, forfeiture is based on rent arrears. The tenant may well be in a position where they can’t pay and recognise the need to end the lease. A better and sometimes cheaper option for both landlord and tenant is to agree that the lease is terminated by surrender of the lease by the tenant.

There are some pros and cons of forfeiture. Other options may include surrender or sub-letting or assignment of the lease to a new tenant.

Our experienced commercial property lawyers can advise on the best solution.We would be happy to advise and assist, so please do get in contact.

Forfeiture and retaking possession is not always the best option and good legal advice is recommended. In some situations the Landlord may not be able to easily find a replacement tenant. There are other potential advantages and disadvantages of forfeiting a commercial lease in each different case.

Potential pitfalls with forfeiture claims

• Waiver – occurs when the Landlord is aware of the breach and performs an act which continues to recognise the existence of the Landlord and Tenant relationship. If the tenant has been in arrears previously and you have accepted rent late without reserving your future rights, as Landlord, legally you may have waived the breach and compromised your right to forfeit based on subsequent arrears.
• Landlord also in breach of the lease – the tenant may claim that the you are in breach of the lease and counterclaim against you. Typical examples might be failure to comply with landlords obligations on maintenance and repair.

Get in touch with our commercial property solicitors in London for help with any issues relating to forfeiture, surrender of a lease or issues relating to relief from forfeiture.