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When you enter a commercial lease, you sign a commercial lease agreement. This legally binding contract contains your rights and obligations in the commercial lease, as well as your landlord’s. You must abide by the commercial lease agreement, or you could face eviction from the property and ultimately lose your business premises. This article will explore the key legal rights of commercial tenants facing eviction in the UK.
This cheat sheet outlines what you should be aware of in your lease agreement.
What is Eviction?
When you sign a commercial lease agreement for your business premises, it will detail the lease end date. If you face eviction, your commercial landlord forces you to leave their commercial property before the lease term ends. Therefore, you must find other commercial premises for your business.
When your landlord wants to evict you from your business premises, they wish to forfeit their commercial lease. This situation may occur, for example, when you:
- are in rent arrears;
- breach a serious lease term; or
- use the commercial property for something illegal.
Can I Be Evicted?
If you are a commercial tenant and want to know your rights regarding eviction, the starting point is to look at your commercial lease agreement.
A critical reason to turn to your lease agreement is to check whether you have a protected commercial lease or not. A protected commercial lease is one with security of tenure. This means you enjoy the legal protection of the right to automatic lease renewal when you reach the lease end term date. If you have a protected commercial lease, your landlord can only evict you on limited legal grounds, and they must follow a strict process for this.
If your commercial lease is not a protected lease, it is a contracted-out lease. Accordingly, you will unlikely have security of tenure. Still, you should review the grounds for eviction and ensure your landlord has a legal basis for evicting you. For instance, they may be able to evict you after several rounds of missing rent, but they would be less likely to legally do so if they randomly change their mind and want to replace you with another tenant.
Additionally, your lease agreement may have a clause that details forfeiture, which is the process for eviction. It should state the grounds for your commercial landlord to be able to trigger this.
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What is Forfeiture?
Forfeiture is where a landlord takes back control of their property, and the commercial lease will immediately end. Your landlord can do this either through peaceable re-entry of their commercial property or through the court. However, they only have a right to forfeiture if your commercial lease agreement says they do.
If you face forfeiture, you have some legal rights. For example, whether forfeiture is through the courts or peaceable re-entry, you have the legal right to a written eviction notice (Section 146 Notice) to explain:
- your breach of the commercial lease;
- how you can remedy the above, where it is possible;
- the notice period for any remedy of the breach and for the eviction to occur (which must follow the lease terms); and
- any compensation you need to pay to remedy the breach.
Additionally, your landlord cannot permit peaceable re-entry when anyone is physically in the commercial property. This does not have to be you as the commercial tenant but can include:
- a security guard;
- your employee; or
- a cleaner.
If your commercial landlord does attempt forfeiture while someone is in their commercial property, they commit a criminal offence.
Also, once your landlord begins forfeiture procedures, they cannot ask you for the rent you owe, as this means they acknowledge the lease continues to exist. Additionally, if you experience an insolvency event, your landlord cannot forfeit the lease, which sometimes applies if they have begun forfeiture procedures.
Commercial Rent Arrears Recovery (CRAR)
Your commercial landlord might attempt the Commercial Rent Arrears Recovery (CRAR) process due to your rent arrears as part of the eviction process. In that case, you have the legal right to seven days’ notice before a bailiff tries to seize your goods.
Your landlord can only use the CRAR process if your rent is at least seven days in arrears and cannot use it to recover other costs, such as service charges or insurance rent.
Key Takeaways
If you are a tenant who faces the unfortunate prospect of eviction from your commercial premises, be aware of your legal rights. Your landlord may be able to evict you in certain instances where you seriously break your lease terms, such as for non-payment of rent. However, there are rules around eviction. For example, if your commercial landlord tries to forfeit their lease, they cannot do so if your commercial lease agreement does not detail this right. Where they can do so, you have a legal right to notice of forfeiture. They cannot simply enter the premises while you are inside, as this would be a criminal offence. Also, if your landlord carries out the CRAR process for unpaid rent as part of your eviction, they cannot include other unpaid items, such as service charges and insurance rent.
If you need help understanding your rights when facing eviction, 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.
Frequently Asked Questions
Eviction is when your commercial landlord forces you to leave their commercial property.
As a commercial tenant, you have some legal rights when you face eviction. For example, the right not to experience peaceable re-entry if someone is in the commercial premises.
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