What if your commercial tenant stops paying rent? What action can you take as a landlord of the property? Shergroup’s commercial property and enforcement specialist, Ms Claire Sandbrook is often asked this question by property landlords across the UK. The answer to this question as per her is ‘Forfeiture’, a landlord’s right to bring the lease to an end in certain circumstances.
The law relating to forfeiture of lease for commercial properties is complex and if the right procedure is not followed, you may end up losing your rights.
Shergroup helps landlords with a wide range of commercial property issues, and we are well-positioned to advise you on the best line of action to pursue, no matter what your circumstances are.
Most commercial property leases contain a “forfeiture of lease” clause allowing the landlord to forfeit the lease if the tenant has breached the terms of the lease, most commonly non-payment of rent. Depending upon the nature of the breach, the landlord can re-take possession of the property immediately by ‘peaceably re-entering’ or following a period of notice. Once the lease has been forfeited, the tenant’s and any subtenants’ right to use the property comes to an end. The notice does not have to be given to the tenant.
If the breach is due to non-payment of the rent, the landlord should make a formal demand that the tenant pays the rent. If the tenant does not comply within the time frame, the landlord has the authority to re-enter the property and forfeit the lease.
This step is a clear indication of the landlord’s intent to terminate the lease, but it is critical to seek legal guidance before proceeding; if an act of forfeiture is later found unlawful, any peaceful re-entry could be construed as trespass.
A landlord can re-enter a property if there are rent arrears in one of two ways:
As per the circumstance the landlord can consider which course of action is best suited. If a tenant has vacated the property and left behind unpaid rent and charges, a peaceful re-entry may be the most effective option to reclaim control. However, if the landlord has any doubts about the tenant’s legal ability to contest the action, it may be safer for the landlord to take legal action.
The simplest way to recover property is by physically entering the property and changing the locks. However, this option should be considered carefully. You cannot enter the property if someone is present at the property at the time of re-entry. When replacing the locks, the landlord must post a notice on the front door stating that the lease has been forfeited by peaceful re-entry for non-payment of rent and that the re-entry means the tenants’ lease has come to an end. When these two steps are conducted together, they send a clear and unmistakable message to the tenant that the lease is up.
If on entering a landlord finds that there are goods or personal possessions of the tenant in the property, then he becomes responsible for those goods. He must deal with those goods in accordance with the law. If the landlord wishes to claim these goods against the money owed by the tenant, he must use Commercial Rent Arrears Recovery (CRAR) process. Failing to safeguard the items could lead to a claim against the landlord for damages from the tenant if their property is damaged or destroyed.
If a peaceful re-entry is not possible under the circumstances, a landlord should file a lawsuit and serve the tenant with possession papers. This is a clear statement of the landlord’s plan to terminate the lease.
The landlord can physically re-enter the property after receiving the claim form, forfeiting, and terminating the tenancy. A landlord can seek to reclaim money owing by the tenant after the lease has been forfeited.
A landlord should serve a notice under Section 146 of the Law of Property Act 1925 if the breach is related to something other than non-payment of rent.
If the cause of the breach of the lease is not rent arrears, the landlord can issue a Section 146 notice. This notice specifies that a tenant has committed a breach, clearly outlines what the breach is, and allows the tenant a reasonable time within which to remedy it. The Section 146 notice may be declared invalid if the renter is not given this option. It’s a good idea to seek legal guidance because there are times when other laws may limit the landlord’s entitlement to forfeiture.
Use the services of a Shergroup Enforcement Agent (Aka Bailiffs) if you need to forfeit your tenant’s commercial lease because of a breach of lease terms. Within hours of deciding to invoke the lease term, a business landlord can arrange for the forfeiture of the lease using our service. However, we will only entertain the case if a tenant is in breach of its contractual obligations and the lease contains an express provision providing for forfeiture in the event of default. The service is offered as a fixed price package. Shergroup Enforcement Agents (Aka Bailiffs) ensures the service levels and can complete the forfeiture procedure, allowing the landlord to proceed with plans to re-let or re-develop the property in no time. And as part of our complete end to end service for landlords, we can provide a range of support services, including locksmiths, security, risk assessments, and cleaning contractors. If you want more information or to check out any details you can visit – https://shergroup.com/product-page/property-forfeiture-of-commercial-lease-service.
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Last updated | 19 July 2023
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