Forfeiture is a necessary part of good property management. As a property manager, we represent the Landlord in good times and not so good times! This means that we act on behalf of a Landlord when taking legal action on a Tenant that has breached the Tenancy Agreement. No Action is taken, unless we have sought and received approval from the Landlord.
What is forfeiture?
Forfeiture is the legal process through which a landlord can terminate a commercial lease due to the tenant’s breach of contractual terms. The most common cause for forfeiture is non-payment of rent. When a tenant falls into rent arrears and fails to remedy the breach, the landlord may resort to forfeiting the lease.
It’s important to note that forfeiture is a serious step and shouldn’t be taken lightly. Both landlords and tenants should seek legal advice in these situations.
Forfeiture of a commercial lease for non-payment of rent
One of the primary reasons for forfeiting a commercial lease is the non-payment of rent by the tenant.
Forfeiture of commercial lease procedure
The process of forfeiting a commercial lease typically involves serving a notice of forfeiture to the tenant. The notice must clearly state the breach and provide a reasonable period for the tenant to remedy the breach (if capable of remedy).
This period must be as specified in the lease or as required by law. If the tenant fails to remedy the breach within the given time frame, the landlord can proceed with the forfeiture. You have to be very careful with this and take advice, as the tenant can claim wrongful forfeiture if the landlord acts too soon and tries to forfeit the lease before the right has arisen.
Serving notice of forfeiture for a commercial lease
When serving a notice of forfeiture, it’s important to ensure that the notice is valid and properly delivered to the tenant. The notice can be served by hand delivery, post or email, depending on the terms of the lease. To avoid potential disputes, landlords may consider using recorded delivery or obtaining proof of receipt for postal notices. Seeking legal advice during this process can help landlords ensure compliance with all legal requirements.
Peaceable re-entry
If the lease is forfeited by a process known as ‘peaceable re-entry’, the premises should be secured (ideally by changing the locks) and a notice should be immediately affixed to the premises confirming the forfeiture. This is usually done outside of working hours, so that the premises are vacant, as a criminal offence can be committed if violence is used to gain entry and there is someone physically at the property who’s opposed to the re-entry.
Alternatively, forfeiture can be carried out by the landlord bringing court proceedings.
Is there an alternative to forfeiture of a commercial lease?
For both landlords and tenants, forfeiture of the lease shouldn’t be the first option considered when facing difficulties. Communication and cooperation between parties can often lead to mutually beneficial solutions and forfeiture should be seen as a last resort.
Legal advice for landlords and tenants
Commercial lease forfeiture is a complex legal matter and it’s critical for landlords and tenants to seek legal advice from experienced professionals. This advice can help parties understand their rights and obligations, explore alternatives and navigate the legal process effectively.
Get legal assistance from a Solicitor
Forfeiture of a commercial lease is a serious step that requires careful consideration. For landlords, it’s important to follow the proper procedures when serving notice of forfeiture and seek legal advice throughout the process. For tenants, it’s crucial to be aware of the risks and potential alternatives to remedy breaches and avoid forfeiture.
By seeking legal advice and approaching the matter with a problem-solving mindset, landlords and tenants can work together to find the best possible outcome.