What does forfeiture of lease mean?
Forfeiture is a complex area of law which allows, in specific circumstances, a commercial landlord to bring a lease to an end where a tenant is in breach of any of its lease obligations or on the occurrence of certain events specified in the lease, for example where a tenant enters an insolvency process.
Can you forfeit your lease?
A landlord’s right to forfeit must be expressly stated in the lease. If there is no specific right to forfeit, then as a landlord you only have an implied right to forfeit if your tenant breaches a condition of the lease e.g. does not pay rent.
As a landlord, you must make sure you comply with various statutory and common law rules before exercising your right to forfeit. This is something our solicitors can assist you with understanding and advise you on.
Furthermore, if the property is rented as residential property or as a mixed space (i.e. commercial and residential), the right to forfeit or peaceably re-enter the property is not available without an order from the court. To restrict a person from lawfully entering a property in these circumstances is a criminal offence and could leave you liable to a fine or even imprisonment.
Finally, if your tenant falls into an insolvency situation, you may not be able to forfeit the lease without consent or permission from the court. Our team of property litigators can help you understand restrictions and which specific restrictions affect your lease in particular.
Procedure for forfeiture
Forfeiture is a final and positive act which as a landlord you cannot withdraw from. Any action taken to forfeit must be clear and demonstrate your intention to forfeit the lease. As a landlord, you must also communicate the act of forfeiture to your tenant.
Forfeiture can be carried out either by peaceably re-entering the property or by issuing and serving possession/forfeiture proceedings at the court.