In brief, forfeiture is a landlord’s right under a lease to end the lease and re-enter the property on a breach of the tenant’s covenants, such as non-payment of rent, or a specified event, such as the tenant’s insolvency.
A former tenant may apply to court for relief from forfeiture under section 146 of the Law of Property Act 1925. The court would then exercise its discretion as to whether to grant relief, which essentially involves balancing the landlord’s entitlement to deal with its own property against the former tenant’s right to apply for relief from forfeiture. If a court grants relief, the effect is as if the lease had never been forfeited.
This raises the question of what impact a landlord’s grant of a new lease to a third party has on a former tenant’s application for relief from forfeiture. In short, a tenant may still apply for relief from forfeiture, but the grant of the new lease could affect the way in which the court exercises its discretion.
A court will take into account various factors, including where a new lease has already been granted to a third party, whether the former tenant delayed in applying for relief from forfeiture and whether the landlord acted quickly and unreasonably in granting the new lease.
A long delay by a former tenant could result in a landlord being denied its right to deal with its property and could therefore count against the former tenant, whereas if a landlord entered into a new lease almost immediately without giving proper notice to the former tenant, this could weigh against the landlord.
A court will also consider whether the new tenant knew of the forfeiture and, therefore, of the possibility that the former tenant could make an application for relief from forfeiture. If a new tenant did know, then this is a factor that will count in the former tenant’s favour.
In the event that relief from forfeiture is granted, the original lease would be reinstated, but with the new tenant as the former tenant’s landlord, while the lease between the new tenant and the original landlord would become an intermediate lease, under which the new tenant would have a claim in damages against the original landlord.
In the circumstances, a landlord, having forfeited a lease, would be well advised to write to the former tenant, and any other party with an interest in the lease, putting them on notice that a new lease will be granted after the expiry of a period. This should be sufficient to allow the former tenant a reasonable amount of time to consider its options and potentially apply for relief from forfeiture.
A former tenant, on the other hand, should not delay in making an application for relief from forfeiture.
If you would like to discuss this or any commercial property matter, please contact the team on 01772 258321.
We are currently in dispute with works carried out by a roofer, contracted by the landlord Red Oak Taverns. He flooded us out 3 times causing damage and electrical issues. This has been going on 3 months in which we have been unable to trade. Our pub landlord has now given us 7 days to the 3 months rent, how can we pay rent when we’re not unable to trade?
We have communicated from the onset that we are not refusing to pay rent but are unable to until we are in a position to trade again. The electrics are the landlords responsibility. We are currently claiming against the contractor but this will take time.
We are worried the pubco will send bailiffs in.
Hoping you can advise me about my situation.
I used to be company director but resigned in July 2015. Since then the current director has missed several rent payments and the landlord has forfeited the lease of the shop for non-payment of rent by peaceable re-entry and changed the locks. The lease was signed in joint names between myself and the current director, and was never changed when i left the business as the current director ‘never got around to it!’. The current director does not want to continue with the lease of the shop and the business is not in a position to cover to outstanding rent.
There are a few questions i have about what would happen next:
1. Would a landlord generally try and recover any rent arrears and additional costs incurred?
2. Would i be liable to pay any of the rent arrears/costs as my name was still on the lease?
3. What would happen to the stock and equipment still left on the shop premises?
4. If the landlord is paid any outstanding money would we have to continue with the lease as it was? Or could a condition of payment be that my name be removed from the lease and it continues in the current directors name, or better still, terminated with no further action?
5. What would happen if the landlord was not paid the requested amount?
If there is any other relevant information that you can offer me i would be very grateful.
Thanks in advance,
Mihir
Helen
Thank you for your enquiry.
An application from relief from forfeiture should be made to the County Court when the property is located by completing Form N5A and making payment of the relevant issue fee. Rule 55 of the Civil Procedure Rules sets out the information that the claim should contain. Generally speaking, the Court will grant relief from forfeiture for non-payment of rent if the tenant makes payment of the rent arrears and any interest due. It is also more than likely that the Court will order that the tenant is to make payment of the landlord’s legal fees incurred as a result of the forfeiture and bailiff’s fees, if a bailiff was instructed to effect forfeiture.
In the event that a tenant wishes to be allowed back into occupation of the property prior to the Court granting relief, a landlord may be willing to agree to allow the tenant to occupy the property on the basis of a tenancy at will until relief is granted.
Should you require any further assistance, please do not hesitate to contact me on 01772 258 321 or rhian.hawins@harrison-drury.com
Kind regards
Relief from forfeiture?
Can anyone help.. is there a particular form which needs to be completed?
where do I find this or can anyone explain the process to me.
forfeiture has been served due to unpaid rent which is now cleared?
Thankyou
I have read with interest the above issues on your wed site.
I own a commercial property and granted my tenants a three year lease. They failed to pay the managing agents fees, insurance and rent for the last year. It would now appear that they have vacated the property, but have failed to notify either myself or the management company. They have not surrendered or given notice on the lease.
Both I and the managing agent have tried repeatedly to contact the tenants both directly and through their solicitor but we are getting no where. How should I best proceed? Would be grateful for your thoughts.
rest regards
James
The freeholder has been granted an Order for possession against the leaseholder for non payment of rent and other damages & costs. The leaseholder sublet to us a 5 year lease the commercial part of the premises to us three years go. The premises are part residential and part commercial. We also had a claim against the leaseholder and the Court made an Order declaring that the Lease granted to us created a business tenancy to which Part II of the Landlord and Tenant Act 1954 applies. The Court also awarded us a Judgement against the Leaseholder that we were entitled to set off against the rent as it falls due to extinguish or reduce the judgment debt or until such time as fully paid.
The freeholders do not recognize our tenancy and are looking for possession. Can I make an application to court for relief from forfeiture under section 146 of the Law of Property Act 1925 considering the same Court granted us the Judgment Order as well.
Do we have a good chance and if successful, would this mean that we can stay rent free for another two years as it just about covers the Judgment debt.
Thank you in anticipation and I may need to ask for your representation.
I run a public house and the pub company(that owned the head lease) of which I was tied to as a sub tenant has breached their terms and have been ordered to forfeit the head lease.
This automatically nulled my lease with the pub company who no longer are in the picture.
The owner wanted vacant possession and I have applied for relief of forfeiture.
Myself and the owner went into out of court negotiation (without prejudice) and they have given me an offer that I accepted, and then changed the goal posts, with the new offer making it financially difficult to agree to.
With this situation being no fault of my own, and the pub company ordered by court to pay their arrears and have lost their head lease therefore the owner has not been subject to any loss, and has gained the lease back, if I go to court for refielf, what are my chances and why.
Thank you for your time
Dear Akna
It seems that as you agreed to leave the property, the issues are the early forfeiture of the lease and the landlord’s refusal to return your goods. We would require further details of the case in order to advice on the lawfulness of the forfeiture, but if it was unlawful, you may be able to bring a claim for damages against the landlord. In regard to your goods, whether the landlord can retain them may depend on whether they are fixtures (i.e. part of the property) or chattels. However, the landlord must return those goods that belong to you, failing which you could claim for their unlawful interference, including a claim for delivery up of such goods and/or damages.
Kind regards
James
Dear Niall
Assuming that the property is used for residential purposes only, the landlord will not be able to forfeit the lease without a court order. It is also unlikely that they could do this while you are absent from the property, though this would depend on the amount of time spent away from the property and whether it could still rightly be regarded as your residence. A couple of other points arise. Firstly, you should check whether such improvements were permitted by the lease. Secondly, it isn’t clear if the landlord has objected to the extension, but you may in any event consider seeking retrospective consent.
Kind regards
James
I bought a takeaway with 11 year of lease existed on the the former sub tenant name. I got the verbal consent from the landlord that lease will be transfered on my name but landlord changed his mind however he was agreed on monthly rent and even recieved two months payment from me but one day when i came to shop the locks were changed and lease was forfieted on not payment of rent then we talk to him and he gave us time of 2 weeks to restate the new lease. We had a meeting with landlord for the discussion of new lease but not agreed upon so we decided to leave the property untill the time our rent expired which was approximately 22 days left and informed the landlord about the decision and he was agreed. But after 6 days again the locks were changed and lease forfieted. Now the landlord is denying access to our goods and stuff. We dont know where we are standing now and what rights we have. The business is damaged and all the goodwill has gone. I spent around 60000 and now sitting at home with nothing in my hand. Can anybody help plzzzzzzzzz.