FORFEITURE AND TERMINATION OF COMMERCIAL LEASES

Landlord Advice UK provides expert guidance on forfeiture and the termintiaon of commercial leases, ensuring landlords take the correct steps while adhering to legal requirements. Forfeiture can be a powerful tool for landlords but must be exercised correctly to avoid potential legal disputes.

WHAT IS FORFEITURE?

Forfeiture is a landlord’s right to terminate a commercial lease if the tenant breaches the terms of the lease agreement or engages in conduct that warrants eviction. This right, however, must be explicitly stated in the lease agreement. In most cases, forfeiture involves re-entry to the property without the need for a court order, provided the tenancy has been excluded from the relevant provisions of the Landlord and Tenant Act 1954.

EXCLUDING THE LEASE FROM THE LANDLORD AND TENANT ACT 1954

One significant advantage for landlords is the ability to exclude certain commercial leases from the security of tenure provisions of the Landlord and Tenant Act 1954. By excluding the lease, tenants lose the automatic right to remain in possession of the property aer the lease expires. This exclusion must be agreed upon at the outset of the tenancy and properly documented.

If the lease has been excluded and the fixed term comes to an end, the tenant has no statutory right to remain in possession. In such cases, landlords can regain possession without a court order, provided the tenant fails to vacate voluntarily. If assistance is required to evict the tenant, we can provide professional support to ensure the process is handled efficiently and lawfully.

FORFEITURE FOR BREACH OF CONTRACT

If a tenant breaches the lease terms, such as failing to pay rent or engaging in prohibited acvies, the landlord may invoke the right of forfeiture. This process generally involves re-entry to the property, effectively terminating the lease. However, the following steps should be followed to ensure compliance with legal requirements:

• Check the Lease Terms: Ensure the lease explicitly includes a forfeiture clause and specifies the grounds for termination.

• Serve a Section 146 Notice (if applicable): In cases involving non-rent breaches, landlords must serve a formal notice under Section 146 of the Law of Property Act 1925. This notice must outline the breach and give the tenant a reasonable opportunity to remedy it.
• Instruct a Certificated Enforcement Agent: Re-entry should be carried out professionally to minimise risk. It is advisable to instruct a certificated enforcement officer to execute the forfeiture, ensuring the process is conducted lawfully.

TERMINATING AFTER THE LEASE HAS EXPIRED

When a lease expires, the process for regaining possession depends on whether the tenant has security of tenure:

• Without Security of Tenure: If the lease is excluded from the Landlord and Tenant Act 1954, the tenant has no right to remain in occupation after the lease expires. The landlord can take steps to recover possession without requiring a court order.
• With Security of Tenure: If the lease grants security of tenure, the tenant has the right to remain in possession for business purposes even aer the lease expires. In this case, the landlord must follow the proper legal procedure to terminate the tenancy. This typically involves serving a Section 25 notice or obtaining a court order.

KEY CONSIDERATIONS FOR LANDLORDS

• Documentation: Ensure all agreements and notices are properly documented and comply with legal requirements.
• Timely Action: Act promptly when dealing with breaches or lease expirations to avoid complications.
• Professional Advice: Seek expert legal guidance to ensure your actions are lawful and effective.

NEED ASSISTANCE? CONTACT LANDLORD ADVICE UK

If you’re a landlord dealing with forfeiture or terminating a commercial lease, Landlord Advice UK is here to help. We provide free expert legal advice and can assist with gathering the necessary documents and evidence to refer your case to our approved solicitors. Contact us today to ensure a smooth and seamless process for resolving your commercial property issues. You can also read more about terminating a commercial lease here.