Forfeiture & recovery of commercial property

There are several common reasons why a commercial landlord may wish to forfeit a lease, including:

Rent arrears

If your tenant has failed to pay rent on time, this is often a straightforward ground for forfeiture.

Breach of other lease terms

Non-rent breaches, such as unauthorised alterations to the property, failure to maintain the premises, or illegal subletting, may also give rise to forfeiture. However, these breaches typically require serving a notice to give the tenant a chance to remedy the situation.

Insolvency or bankruptcy

If a tenant becomes insolvent, you may be able to forfeit the lease to protect your property from being caught up in the tenant’s financial troubles.

Once you’ve identified a breach, it’s essential to make it clear that you wish to forfeit the lease. If you continue to accept rent or allow the tenant to remain in occupation without taking action, the courts could interpret this as a waiver of your right to forfeit. Therefore, timing is critical.

At Anthony Gold, we help landlords take decisive, lawful steps to communicate their intention to end the lease while protecting their rights. Our expertise ensures that you don’t unintentionally lose your right to forfeiture by accepting payments or delaying action.

In some cases, landlords can regain possession of a commercial property without going through the courts. This is typically possible through peaceable re-entry, where you change the locks while the tenant is not on the premises.

However, this must be done with great care to avoid breaking the law and facing potential claims of unlawful eviction. Peaceable re-entry is only an option for rent arrears, not for other breaches of the lease, where a court order will usually be required.

If peaceable re-entry isn’t appropriate or the breach relates to something other than unpaid rent, you may need to seek a possession order from the court. This involves proving the breach, serving the correct notices, and applying to the court for a decision to end the tenancy.

While court proceedings can be more time-consuming, they provide a legally sound solution for regaining control of your property, especially in more complex situations.

Before you can terminate a commercial lease or repossess a property, you must typically serve the tenant with the appropriate legal notice. If the breach relates to rent arrears, this notice will inform the tenant of the outstanding rent and your intention to forfeit the lease if payment is not made.

For other breaches of the lease, such as unauthorised alterations or failure to maintain the premises, a Section 146 Notice under the Law of Property Act 1925 must be served. This notice details the breach, gives the tenant an opportunity to remedy it, and informs them of your intention to terminate the lease if the issue is not resolved.

Serving the correct notice is a crucial first step. A poorly drafted or invalid notice can undermine your right to forfeit the lease, leading to unnecessary delays and complications. Our solicitors at Anthony Gold ensure that your notices are legally sound, giving you the best chance of success.

Once the notice has been served and the tenant has failed to remedy the breach, you may be able to recover possession of your commercial property. There are two main routes landlords can take, depending on the situation:

Peaceable Re-entry

In cases of rent arrears, landlords may be able to regain possession through peaceable re-entry, which involves changing the locks while the tenant is not present. While this can be a quick solution, it must be carried out with great care.

If the tenant or their belongings are still on the premises, or if there is any confrontation, the re-entry could be considered unlawful, leading to potential claims of wrongful eviction.

Peaceable re-entry is only available for commercial properties, and it cannot be used for breaches unrelated to rent arrears.

Court Possession Order

If peaceable re-entry is not appropriate – for instance, if the tenant is still occupying the property or the breach relates to issues other than rent arrears – you will need to apply for a possession order through the court.

This involves presenting evidence of the breach and proving that the correct notice was served. The court will then decide whether to grant you the right to repossess the property. While court proceedings can take longer, they provide a legally secure outcome and reduce the risk of disputes.

We help landlords assess whether peaceable re-entry is viable or if a court order is necessary. Our experienced solicitors handle all aspects of the process, from drafting and serving notices to representing you in court if needed.

Timing is critical when dealing with forfeiture. If you continue to accept rent from the tenant or allow them to remain in the property without taking action, you could unintentionally waive your right to forfeit the lease. Waiver occurs when a landlord’s actions suggest that the lease is still in effect despite the tenant’s breach.

To protect your rights, you must act decisively once a breach has occurred. We advise landlords on the steps they must take to avoid waiving forfeiture, ensuring that your right to repossess the property remains intact.

In some cases, repossession may not be the best option for either party. If the tenant is in arrears but wishes to continue the lease, or if a breach can be remedied, it may be possible to reach a negotiated settlement.

For example, landlords may agree to a structured repayment plan for rent arrears, allowing the tenant to remain in the property while ensuring future payments are made on time.

Our solicitors are skilled in negotiation and can help you reach a fair settlement that protects your financial interests while maintaining a positive relationship with the tenant. A well-negotiated agreement can often resolve issues more quickly than legal proceedings, saving both time and costs.