Forfeiture is a powerful legal remedy that allows a commercial landlord to terminate a lease early due to a tenant’s breach of its terms. Whether due to unpaid rent, property misuse or breach of covenant, forfeiture can help landlords regain control of their premises when a tenancy has gone wrong. But it’s not a process to be taken lightly.
There are strict rules governing when forfeiture is allowed, how notice must be served and what rights tenants have to apply for relief. Missteps can lead to legal disputes, delays or financial losses. In this guide, we explain how and when forfeiture can be used – and how a solicitor can help ensure the process is handled lawfully and efficiently.
What is forfeiture of a lease?
Forfeiture is the legal process by which a landlord brings a commercial lease to an end before the agreed term, usually due to a serious breach by the tenant. It’s a contractual right that must be clearly set out in the lease itself – without a forfeiture clause, the landlord will not have the legal basis to take back possession early.
The most common grounds for forfeiture include non-payment of rent, failure to keep the premises in repair, subletting without consent or using the property for unauthorised purposes. Once a breach occurs, landlords must decide whether to waive their right to forfeit or take formal steps to end the lease.
When can a landlord forfeit a commercial lease?
The timing of forfeiture depends on the nature of the breach. For non-payment of rent, landlords can technically take action as soon as the rent is overdue, though in practice many leases include a grace period – typically 14 or 21 days. For other breaches, such as repair obligations or illegal use of the property, landlords are required by law to serve a formal Section 146 Notice.
This notice must outline the specific breach, give the tenant a reasonable opportunity to remedy it (if possible) and warn that the lease may be forfeited if they fail to do so. Only if the tenant does not respond or remedy the issue in time can the landlord proceed with forfeiture.
Methods of enforcing forfeiture
There are two main ways a landlord can enforce forfeiture – by peaceable re-entry or through court proceedings. Peaceable re-entry involves the landlord or their agent physically entering the property, usually outside of business hours and changing the locks. This is only lawful if no one is present and there is no resistance.
Alternatively, landlords may apply to the court for a possession order. This route is often used for breaches other than rent arrears or where peaceable re-entry might be risky or contentious. The court will examine whether the breach occurred, if it justifies forfeiture and whether the tenant should be granted relief.
Relief from forfeiture
Tenants who have been served notice or had their lease terminated may apply for relief from forfeiture. This legal remedy allows the tenant to ask the court to reinstate the lease, provided they remedy the breach and pay any associated costs. For rent arrears, this usually means settling the debt promptly. For other breaches, tenants may need to make repairs or offer assurances that the breach will not continue.
Courts generally favour maintaining leases where possible, especially when the breach is minor or has been quickly rectified. That’s why landlords must consider the likely response before initiating forfeiture, as the process can be costly and time-consuming if contested.
There are time limits for seeking relief. In rent arrears cases, tenants typically have six months from the date of peaceable re-entry. For other breaches handled via court proceedings, the relief application must usually be made during or soon after the possession process.
Why legal advice is essential
Forfeiture is a legally complex and potentially high-risk action. Landlords must be cautious about inadvertently waiving their right to forfeit – for example, by continuing to accept rent after a breach has occurred. Incorrectly serving a notice or taking premature action could lead to claims for unlawful eviction, damages or even reinstatement of the lease.
A commercial property solicitor can provide clarity and ensure the right procedures are followed. This includes reviewing the lease terms, confirming whether forfeiture is permitted, preparing and serving a valid Section 146 Notice and advising on enforcement options. They can also represent landlords or tenants during any court proceedings or negotiations for relief.
Similarly, tenants facing forfeiture threats should seek legal advice immediately. A solicitor can help assess the validity of the breach, negotiate a resolution or apply for relief to prevent eviction and protect their business.
Talk to our commercial lease specialists today
If you are a landlord considering forfeiture or a tenant who has been served notice, understanding your rights and obligations is critical. At Osbourne Pinner Solicitors, our team specialises in landlord-tenant disputes and can help you navigate every step of the process.
We offer a free 30-minute consultation to discuss your case and recommend the best course of action. Contact us today via the form below, call 0203 983 5080 or email [email protected] to speak with one of our commercial property solicitors. Whether you’re enforcing or contesting forfeiture, we’re here to help in Harrow, Canary Wharf, Piccadilly Circus and Manchester.
