Forfeiture is a powerful legal remedy that allows a landlord to terminate a commercial lease when a tenant has breached its terms. While it can be an effective tool to regain possession of a property, the process must be handled carefully to avoid costly legal pitfalls.
In this guide, we’ll explain what forfeiture means in commercial lease agreements, when it can be used and provide a step-by-step breakdown of the process landlords must follow to forfeit a lease lawfully in England and Wales. We’ll also explain how a free consultation can help you explore your options without any obligation.
What is forfeiture of a commercial lease?
Forfeiture is the right of a landlord to end a lease early if the tenant has breached its terms. This might include:
- Non-payment of rent
- Unauthorised alterations to the premises
- Subletting without permission
- Using the property for illegal or unauthorised purposes
- Failing to keep the property in repair
Most commercial leases include a forfeiture clause, which sets out the conditions under which the lease may be brought to an end. Without such a clause, the landlord may not have the right to forfeit.
Forfeiture is not automatic – the landlord must take active steps to enforce their right and the tenant may be entitled to apply for relief.
Step 1: Identify the breach
The first step in the forfeiture process is to confirm that the tenant has actually breached the lease. Not all breaches automatically allow forfeiture and the landlord should review:
- The exact wording of the forfeiture clause
- Whether the breach falls within the clause
- Whether the lease imposes any notice or grace periods
The most straightforward grounds for forfeiture is non-payment of rent. Other breaches (known as “non-rent breaches”) typically require formal notification before any action is taken.
Step 2: Decide on the method of forfeiture
There are two ways to forfeit a commercial lease:
1. Peaceable re-entry
This is where the landlord physically re-enters the premises and changes the locks, effectively taking possession of the property.
- It can only be used when the premises are unoccupied
- It must be done without force
- It is commonly used for rent arrears
Warning: Peaceable re-entry carries significant legal risk. If the landlord gets it wrong, they could be liable for unlawful eviction or trespass. It’s best used with legal support.
2. Forfeiture by court proceedings
If the tenant is still in occupation or the breach relates to non-rent issues, the landlord must apply to the court for possession.
- A claim is made in the County Court
- The court assesses whether the breach justifies forfeiture
- A possession order is granted if appropriate
This method is slower but often safer – especially if the tenant is likely to dispute the breach or apply for relief.
Step 3: Serve a Section 146 Notice (for non-rent breaches)
If the breach is something other than unpaid rent, the landlord must serve a formal notice under Section 146 of the Law of Property Act 1925.
The notice must:
- Set out the specific breach
- Give the tenant a reasonable time to remedy the breach
- Warn that the lease may be forfeited if the breach continues
This notice gives the tenant the chance to fix the issue before facing lease termination. Failure to serve a valid Section 146 Notice may invalidate the forfeiture attempt.
Step 4: Wait for the tenant to respond
After serving a Section 146 Notice (if required), the landlord must give the tenant time to respond or remedy the breach. The period depends on the circumstances but generally:
- 14 days is the minimum for rent arrears (often no notice is needed)
- 14 to 28 days may be reasonable for repair or use breaches
If the breach is not remedied in the required time, the landlord may proceed to enforce forfeiture.
Step 5: Enforce forfeiture
Depending on the method chosen:
For peaceable re-entry:
- Instruct a certified bailiff or enforcement agent
- Attend the premises when unoccupied
- Change the locks and display a notice confirming forfeiture
Ensure an inventory is taken and photographs are kept for legal protection.
For court proceedings:
- File a possession claim with the court
- Serve the claim on the tenant
- Attend the hearing and seek a possession order
If the court grants the order, it will specify a date by which the tenant must vacate. If they fail to do so, the landlord may apply for a warrant of possession.
Step 6: Consider relief from forfeiture
Tenants have the right to apply for relief from forfeiture, either before or shortly after the landlord takes possession. The court can reinstate the lease if:
- The breach has been remedied
- Rent arrears have been paid in full
- The tenant has acted reasonably and in good faith
For rent arrears, relief is usually granted if payment is made quickly. For other breaches, the court will weigh up fairness and the behaviour of both parties.
Key considerations for landlords
- Always check the lease terms carefully before taking action
- Keep detailed records of all breaches, correspondence and actions taken
- Seek legal advice from commercial property solicitors to minimise the risk of unlawful forfeiture
- Be prepared for a tenant’s application for relief
Improper forfeiture can lead to expensive legal claims, especially if the tenant suffers business disruption or loss of reputation.
Get expert legal advice on lease forfeiture
Forfeiting a commercial lease is a serious step with lasting consequences. Whether you’re a landlord considering enforcement or a tenant facing the risk of forfeiture, it’s vital to understand your rights and obligations.
At Osbourne Pinner Solicitors, we help landlords and tenants navigate the forfeiture process with confidence. From reviewing breach allegations to handling court proceedings and defending against relief claims, we offer practical legal support every step of the way.
To make things easier, you can start with a free 30-minute consultation by video call or at our offices in Harrow, Canary Wharf, Piccadilly Circus or Manchester City Centre. Arrange your session by calling us on 0203 983 5080, emailing [email protected] or using the enquiry form below.
