Forfeiture & S146 notices
A landlord has the right to terminate a business lease if the tenant is in breach of a tenant obligation under the lease or if the lease contains provisions to allow the landlord to terminate on the occurrence of a specific event. In these circumstances, the landlord may think it appropriate to forfeit the lease.
Our specialist Dispute Resolution team have considerable expertise in representing landlords who wish to terminate a business tenancy using forfeiture.
In most circumstances a landlord cannot take steps to forfeit a business lease for breach of covenant by the tenant until it has served a notice known as a ‘section 146 notice’. The section 146 notice provides the tenant a time limited opportunity to remedy the breach. If the tenant fails to remedy the breach, the landlord may proceed with forfeiture.
A landlord may forfeit a business lease by:
- Peaceable re-entry; or
- Issuing and serving possession proceedings.
Please contact our specialist Dispute Resolution team to obtain further details on the forfeiture procedure.
Key considerations for landlords
A landlord must consider the commercial repercussions of forfeiting a business lease and whether any benefit will be obtained from taking back possession of a property. A landlord must be minded that forfeiture will automatically terminate an existing business lease which means that the landlord will be left with a vacant property. A landlord must therefore consider whether, in the current economic climate, they will be able to quickly secure a new tenant. If a landlord is left with a vacant property for a significant period of time they may incur additional outgoings such as business rates.
A commercial evaluation must always be undertaken when dealing with forfeiture and a landlord considering forfeiture should seek independent legal advice to discuss their options with an expert.
Our specialist Dispute Resolution team can provide a bespoke service in respect of the procedure for forfeiture. For more information about our expertise and how we could help you, please contact us.