Summary
- Commercial landlords in the UK can lock tenants out of their premises without a court order, using a process called peaceable re-entry.
- Forfeiture can only occur if the lease contains a forfeiture clause, and only in specific circumstances such as rent arrears, illegal use, or insolvency.
- Tenants who are locked out can apply to a County Court for relief from forfeiture, and retain ownership of any goods left on the premises.
- This article is a plain-English guide to commercial lease forfeiture for business tenants operating in the UK.
- It has been produced by LegalVision, a commercial law firm that specialises in advising clients on commercial leasing matters.
Tips for Businesses
Check your lease for a forfeiture clause and understand the conditions that trigger it. Keep rent payments up to date and within the timeframes specified. If locked out, act quickly – apply to the County Court for relief from forfeiture and arrange collection of any goods left on the premises.
Commercial leases operate differently from residential leases in the UK. One key difference is how your landlord can lock you out of your commercial premises. Although this can occur for residential premises, it needs a court’s permission first. For commercial premises, however, a landlord can lock you out of your premises without going to court first. As such, commercial tenants can quickly find themselves locked out of their business premises. This article will explain the situations where a landlord can lock you out of your premises in the UK.
Forfeiture
Your commercial lease agreement should have a forfeiture clause. Forfeiture clauses allow your landlord the right of re-entry. In other words, landlords can evict you before the lease term ends when certain circumstances occur. This has the effect of instantly ending the commercial lease. Your landlord can only forfeit the lease if your lease agreement has a forfeiture clause.
A commercial landlord can only exercise forfeiture for specific reasons. Landlords typically exercise this clause when the tenant’s rent payments are substantially late. Late payments are generally considered those made 14-28 days after the initial payment date. However, the commercial lease agreement will state the relevant time period. A commercial landlord can also rely on the forfeiture clause in cases where:
- you use the property for something illegal;
- you become insolvent;
- you abandon the property; or
- for any lease breach.
Peaceable Re-entry
When a commercial landlord locks you out of your retail premises, they enter the property and change the locks. Therefore, you are locked out as your keys no longer work, and they have not given you a set for the new locks. A commercial landlord can only lock you out of your premises if one of the reasons for forfeiture applies in your given situation.
When your landlord locks you out of your commercial premises in the UK, they term this peaceable re-entry. It is one of two ways your commercial landlord can carry out forfeiture. The other is through a court order by application to the County Court. However, landlords will likely choose peaceable re-entry as this is more cost-effective than an application to the County Court.
Your landlord will most likely lock you out of the commercial premises when you are not there. Commercial landlords cannot lock you out when you are physically occupying the property. UK law prohibits this as this can cause a risk of violence, which is a criminal offence. Landlords will usually, therefore, enter late at night or first thing in the morning. Your landlord does not have to ask bailiffs to accompany them when they carry out peaceable re-entry. Once your landlord changes the locks and locks you out, they should leave you with a notice. The notice should inform you of what your landlord has done.
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Effect of Commercial Tenant Being Locked Out
If your landlord locks you out of your commercial premises, they forfeit the commercial lease and it ends immediately. It means that you can no longer trade on your business premises. If this occurs, you do still have some recourse towards the forfeiture. You can apply for relief from forfeiture from a County Court.
However, you still have some rights regarding your goods that were on the commercial premises. These are not the property of your commercial landlord despite being locked out of your commercial premises. These remain your possessions as the rightful legal owner. Your landlord should serve you a notice concerning the items that remain on the commercial premises. Commercial landlords may only sell these items where you do not go and get them within a reasonable time span.
This cheatsheet includes practical tips to understand key clauses and avoid disputes in leasing agreements.
What Happens to Your Lease Deposit?
If your landlord forfeits your lease, you may wonder what happens to any deposit you paid at the start of the tenancy.
Your landlord cannot automatically keep your deposit simply because they have locked you out. The deposit should only cover losses your landlord can prove, such as unpaid rent or damage to the property.
If you apply for relief from forfeiture and the court grants it, your lease continues. In that case, your landlord must return any deposit amount that exceeds their proven losses.
You should act quickly if your landlord locks you out. Courts expect tenants to apply for relief promptly. If you delay, the court may refuse your application.
Keep records of all rent payments, communications with your landlord, and any notices they leave you. This evidence will support your case if you apply for relief from forfeiture.
Key Takeaways
As a tenant, you may find your landlord has locked you out of your commercial premises. Your landlord has the legal right to lock you out of your business premises in certain circumstances. When your landlord does this, this is called ‘peaceable re-entry’, which is a method of forfeiture. Peaceful re-entry involves your landlord entering your business premises when you are not there and changing the locks so you cannot enter. Your landlord can only carry out peaceable re-entry where conditions for forfeiture apply. The forfeiture clause in your commercial lease agreement must detail these conditions. Forfeiture may occur for several reasons, but landlords generally rely on this clause due to rent arrears.
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Frequently Asked Questions
Your commercial landlord can lock you out of your premise in the UK through forfeiture with the method of peaceable re-entry, which is where they change the locks.
Your commercial landlord can lock you out of commercial premises for any reason that the forfeiture clause in your commercial lease details such as, for example, being in arrears with rent for a specific period.
No. Your landlord can only forfeit your lease if your commercial lease agreement contains a forfeiture clause.
Yes. Your goods remain yours. Your landlord must notify you, and may only sell them if you don’t collect them within a reasonable time.
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