Forfeiture of lease: best practice

There are lots of situations where a tenant can find themselves in financial difficulties and are unable to pay the rent. As landlords, it is important to try to work with tenants but also to protect yourself from the loss of income that can occur if tenants are unable to pay their dues.

What is forfeiture?

Probably the most common cause of forfeiture being carried out is rent having not been paid for between 14 and 21 days. At this point, many landlords decide that the best option to avoid there being a large rent arrears is to carry out forfeiture, rather than simply waiting for the debt to keep building up while they wait for the tenant to pay them. But landlords should be cautious about doing this without seeking advice from enforcement officers or solicitors first to ensure there is a solid, legal basis for the action.

The ability to forfeit a lease in the case of rent non-payment allows a landlord to instruct a Certified Enforcement Officer to legally enter a property in order to prevent the tenant from re-entering when the tenant is in breach of their tenancy agreement – doing this terminates the lease.

Before a landlord can do this, there needs to be an established basis for this action. One way to do this is to use one of the specific clauses in the lease that allows the landlord to take the action under certain conditions.

Matters to consider

If the property in question is a commercial one, for example, and the corporate tenant is in administration, then the landlord may need permission from the court or consent from the administrator before forfeiting the lease.

Landlords need to follow a statutory notice procedure before leases can be terminated in all breaches apart from non-payment of rent. For the situations not including non-payment of rent, a Section 146 notice needs to be served to the tenant which gives them time to remedy the breach.

This notice will need to contain details of the alleged breach, require the tenant to correct the breach (if possible), and provide the tenant with reasonable time for the correction. You can also ask for compensation for the breach.

Only if the action is not taken to remedy the breach after the stated period can the landlord act on the right to forfeit.

Acting on forfeiture

When it comes to acting on the forfeiture, there are a few considerations. One of them is how to regain control of the premises. In most cases, ‘peaceable entry’ is the option used such as changing the locks when the building is empty. But if the tenant is present or the property is in any part residential, the landlord could risk committing a criminal action by doing this. The landlord must also take responsibility for any goods that remain on the premises and ensure they are returned to the tenant.

The risk of criminal action is one of many reasons for using Certified Enforcement Officers. This is the safest option once the landlord is confident of their basis for forfeiture. That way the enforcement agency can advise on the best, legal way to regain control of the premises and any steps which are required to prevent re-occupancy by the tenant.

Our professional team have years of experience working with landlords to ensure that forfeiture of lease is carried out correctly and properly. If you require help with process serving and removing tenants from your commercial property for non-payment of rent then get in touch by calling 0845 370 7401 or fill out our contact form and we will get back to you as soon as possible.

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