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Robert Twining, a partner in our Property Dispute Resolution team, discusses forfeiture – peaceable re-entry and how this can be a potential remedy for commercial landlords.
In the event of a tenant of commercial premises being in arrears of rent, one remedy a landlord may wish to pursue is to forfeit the lease. Often the quickest and most inexpensive way of forfeiting the lease would be for the landlord to peacefully re-enter the premises. Peaceable in this context only means without the assistance of the Court. In practice, it is often only as peaceful as breaking the locks can be. Re-entry by this means can only be conducted by a certificated bailiff.
Before a landlord is able to undertake this rather draconian step however certain preconditions must be met. First, it is essential to establish that the right to re-enter exists. There are many forms of tenancy which cannot be determined by forfeiture but those are mainly residential. With commercial leases it is essential to establish that the tenancy agreement contains a written re-entry clause. Without this clause a landlord’s right to forfeit will not be implied. Further, in order to be able to proceed with re-entry immediately, the clause will need to dispense with the need for formal demand. If that provision is lacking, a formal demand for the outstanding rent would need to be made in person by visiting the premises between sunrise and sunset and again at sunset on the last day before the right to forfeit arises. Most modern day leases contain a forfeiture clause including the clause dispensing with the need for formal demand.
It is also important to remember that in most cases the right to forfeit does not arise immediately following the non-payment of rent. More often than not the forfeiture clause will provide for the forfeiture remedy arising 14 or 21 days after the rent falls due.
One of the more complicated aspects of the right to forfeit is whether the right has been waived by the landlord. As soon as a landlord knows of circumstances giving a right to forfeit such as non-payment of rent, he has an election to make. He can either choose to forfeit or he can treat the lease as continuing. In the event of him doing something inconsistent with the one course of action, he is taken to have elected to pursue the other. Therefore, following the right to forfeit arising, if the landlord acts in a way consistent with the lease continuing such as accepting rent which subsequently becomes due he will waive his right to forfeit. This would not however prevent the landlord from having a fresh right to forfeit in the event of a further breach.
A certified bailiff, whilst entitled to break the locks in order to re-enter cannot use force against any person on the premises. Therefore, a bailiff will generally forfeit a lease in the very early hours of the morning before the premises are occupied.
A tenant arriving at the premises to carry on business but finding the locks changed and being unable to gain entry will have a right to apply for relief from forfeiture. In the case of peaceable re-entry a tenant can make an application for relief at any time but in order to be granted relief (which means having the lease re-instated) will necessarily involve him having to pay all outstanding rent and the landlords costs associated with the forfeiture. The right to relief is discretionary and if the landlord has granted right to a third party such as a new tenant relief it is unlikely to be given.
For more information on this subject or any other legal matter, please contact us: Tonbridge: 01732 770660 | Sevenoaks: 01732 747900 or email firstname.lastname@example.org