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When you enter a commercial lease, you typically commit to the agreement until the end of the lease term. However, if a commercial tenant breaches the lease, such as non-payment of rent, the lease may contain the landlord’s right to forfeit the lease. Forfeiting a lease can involve peaceable re-entry or through a court order. In both scenarios, the lease agreement will end. This article will explain what it means to forfeit a lease.
What is Forfeiture?
Forfeiture is where a landlord evicts their tenant from the commercial property. Accordingly, the lease will terminate, and the landlord can access the property again. You may hear a person refer to this as ‘re-entry’.
A commercial landlord may seek to forfeit a lease if their tenants do not abide by the lease terms. Some commercial lease agreements will also specify other instances where the landlord can forfeit the lease.
What is the Forfeiture Process?
Forfeiture of a lease can happen on two different days. One way is through peaceable re-entry. This means that the commercial landlord physically enters their property to gain back possession. They can either personally enter the property or ask the bailiff (legal officer) to do so on their behalf. Once they re-enter the property, they should leave a note for the tenant to indicate their forfeiture and details.
The alternative process for forfeiture is for the landlord to carry out legal proceedings. Here, forfeiture will take place through a court order. Forfeiture by legal proceedings requires a commercial landlord to follow civil procedure rules. Once the court makes an order for possession, the lease terminates.
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Risk of Committing a Criminal Offence
If a landlord does not carry out the process correctly, re-entering the property could be a criminal offence. If a landlord tries to gain access to the premises through force that is more than necessary, this would not be a ‘peaceable re-entry.’ Likewise, if someone else is in the property during the re-entry and a landlord uses violence to enter, it could be a criminal offence.
After a landlord regains possession, they must leave a note explaining their intention to forfeit the lease. They must remind the tenant that only the landlord can authorise people to enter the premises from this point onwards. Therefore, if the tenant tries to enter unauthorised, they would commit a criminal offence.
Waiving the Right to Forfeiture
Forfeiture can only occur in a commercial lease where the lease agreement gives a landlord this right. However, there are situations where a landlord can waive their right to forfeit a lease, either intentionally or not.
Where all of the following occur, it will constitute a waiver of the right to forfeit a commercial lease:
- a landlord behaves as though the commercial lease continues rather than terminates, such as by accepting rent from their tenant;
- they recognise that the tenant has breached the lease; and
- acts in a way that indicates to the tenant that the lease continues.
A tenant must show court evidence to show that a commercial landlord waives their right to forfeiture. If a tenant can prove their landlord knew of the lease breach and continued to accept rent, it indicates an intention to continue the lease – not forfeit it.
This cheat sheet outlines what you should be aware of in your lease agreement.
Key Takeaways
Forfeiting a lease is a landlord’s right to end the commercial lease early. A landlord might enforce this right if their tenant breaches the lease and wishes to regain possession of their property. There are two ways to carry out this process, either by peaceable re-entry or through legal proceedings. If a landlord seeks to enter the property through force, this can lead to a criminal offence. Conduct by the landlord that indicates the lease is still on foot could also waive their right to forfeit the lease. For example, if a landlord continues to accept rent, they cannot then forfeit the lease for a past breach.
For more information about the forfeiture process, our experienced leasing lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
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