Forfeiture of a Commercial Lease

Forfeiture is the landlord's right to end a lease early because the tenant is in breach, for example by not paying rent. It is powerful but full of traps, above all the risk of waiver.

Two routes

• Peaceable re-entry: for rent arrears, a landlord can often forfeit by physically re-entering the empty premises and changing the locks, without a court order. No section 146 notice is needed for non-payment of rent.
• Court proceedings: for breaches other than rent, you must first serve a section 146 notice under the Law of Property Act 1925, specifying the breach and giving a reasonable time to remedy it, before starting a possession claim.

Waiver

Any act that treats the lease as continuing, such as demanding or accepting rent after you know of the breach, can waive the right to forfeit for that breach. Waiver is easily and accidentally triggered, so once a breach is known, stop rent demands and take advice immediately.

Relief from forfeiture

The tenant can apply to court for relief from forfeiture, and will often get it if they put the breach right. For arrears this is generally available within six months. So forfeiture does not always give you clean possession.

Get advice first

Forfeiture decisions interact with insolvency, subtenants and guarantors, and a wrong step can expose you to a claim. Take legal advice before forfeiting. See also commercial rent arrears and CRAR, which cannot be combined with forfeiture for the same breach.

Can I forfeit a commercial lease without going to court?

For rent arrears, a landlord can often forfeit by peaceable re-entry, without a court order. For other breaches you must first serve a section 146 notice.

What is waiver of forfeiture?

Any act treating the lease as continuing, such as demanding or accepting rent after you know of the breach, can waive the right to forfeit for that breach.