Landlord Forfeiture of Lease Guide
Estimated reading time 5 minutes
Forfeiture of a lease can be a useful option for landlords who are dealing with tenants who are in breach of their contract. It can be a way for landlords to take back their property and move the tenants out. However, there are strict processes to follow to do this properly, which we’ll explore in this guide.
What is a forfeiture of lease?
A forfeiture of lease means that the landlord will be able to terminate a lease, usually due to a breach of contract by the tenant. In most cases, there will have to be a clause relating to forfeiting the lease in the tenancy agreement in order for it to be utilised.
What’s the difference between forfeiture and surrender of lease?
When a lease is surrendered, it will usually be initiated by the tenant. There is no obligation for a landlord to accept a surrender of lease. Often, they may choose to accept a surrender if there is a benefit to accepting the property back, such as finding a better tenant or if they want to occupy the property themselves.
The difference then between forfeiture and surrender of lease is that a forfeit will usually be initiated due to a fault by the tenant and not by their choice. The landlord will typically commence a forfeiture of lease after the breach of contract has happened.
A lease can also sometimes be terminated early if there is a break clause in the contract. Sometimes, leases will include a clause that allows the landlord or tenant to break the lease after a certain period of time, or with a certain amount of notice, usually two to three months. This gives both parties flexibility to end a tenancy if the situation isn’t working, but there will usually be strict terms to follow.
When can a forfeiture of lease be used?
Depending on why the forfeiture of lease has occurred, the termination can occur immediately or after notice has been given to the tenant. One of the most common uses of forfeiture is due to the tenant not paying rent. In this case, there is typically a grace period given to the tenant, allowing them time to pay the rent after notice has been given.
Other situations which could result in a forfeiture of lease include violating the tenancy agreement, using the property in a manner which it was not intended, changing the use of the property without permission (i.e., switching it from commercial to residential), subletting the property without permission, or excessive noise. If the property has been damaged, the landlord can also sue for damages, as well as reclaiming the property.
What should landlords do before forfeiting a lease?
If a landlord believes there has been a breach of the contract which should result in a forfeit, they will have to issue a warning notice to the tenant, known as Section 146 of the Law of Property Act 1925. The notice will have to detail the breach and also how the tenant can remedy the situation. If the tenant does not fix the issue within a reasonable period, the landlord can move proceedings to court.
What happens when a lease is forfeited?
For residential properties, the landlord can only re-possess a property after successful court proceedings. For a commercial property, a bailiff or Certified Enforcement Agent can peaceably enter a property, but if violence is used or threatened, both the agent and the landlord would be liable for a criminal offence. For a property that has both residential and commercial use, reentry will only be allowed after court proceedings.
What happens after a lease is forfeited?
The tenant has the option to apply for relief from forfeiture. Often, if a tenant is able to remedy the breach of contract, the court will grant relief and reinstate the lease. Sometimes, if the issue is arrears of rent, the court will make an order for possession but subject to the rent arrears and all costs being paid within a period of time.
If the forfeiture goes through, the landlord will be able to take repossess the property. The tenant’s personal possessions in the property will remain their property unless there is a provision in the lease that states otherwise. If the landlord attempts to remove the tenant’s property, the tenant will be able to use them for conversion or trespass.
They should be given an opportunity to remove their goods within a specified period, while supervised. If they haven’t moved their possessions out of the property after notice has been given, the landlord should be able to remove them themselves.
Should a landlord initiate the forfeiture of a lease?
Forfeiture can be a powerful tool for landlords to use when dealing with breaches of contract. However, court proceedings can be costly and strict processes must be followed for a forfeiture to be valid. It’s always best for a landlord to seek legal advice if they believe a forfeiture of lease should be initiated.