COMMERCIAL LEASES
COMMERCIAL LEASES
Forfeiture Clauses in Shop Leases: A Trap for the Unwary.
Disputes between landlord and tenant are very common and are usually associated with failure to pay rent or other breaches of covenant. Most rent disputes end up in court, but it can take years before a landlord can secure a money judgement against the tenant or, more importantly, get an order for vacant possession. Many tenants, as a matter of strategy, delay the whole process even further.
A lot of tenants, however, fail to realise that a landlord can use the lease provisions to forfeit their lease and re-possess the premises within two weeks or thereabouts all without the need for any court application or order.
This forfeiture clause allows a landlord who is owed rent to demand his rent payment, usually within two weeks, and to legally re-enter the premises if he has not been paid by then. If necessary, the landlord can even break into the premises to re-possess the property and change the locks.
A tenant can apply himself to court to stop the landlord’s action. A tenant who has most of his rent arrears in hand will usually be allowed full relief by the court on handing over his rent payment. A tenant who has excuses only and no rent will likely lose his lease to forfeiture.
Most landlords are willing to come to an arrangement with tenants; however, some larger or institutional landlords prefer to take the forfeiture route because of its speed and low cost and particularly where there has been an ongoing saga of rent issues with the tenant.
So, a warning to all tenants: If rent arrears are allowed build up too much, be wary of the forfeiture clause in your lease, as the landlord can bypass the court and serve you with a 14-day notice to re-possess the premises in the event he is not paid his arrears.
Any tenant who receives such a notice would be well advised to consult a solicitor promptly either to broker a settlement with the landlord or to prepare a court application to try and have the landlord’s actions set aside.