Forfeiture is the right of a landlord to bring a lease to an end before its contractual expiry date as a result of a breach by the tenant. It is available in both commercial and residential leases where the lease contains a forfeiture clause, which most do. Understanding how it works, and the protections that exist against it, is important for both landlords and tenants.
Forfeiture is available where the lease contains a forfeiture clause and the tenant has breached a covenant, condition, or other term of the lease. The most common grounds are non-payment of rent and breach of a repairing or other obligation. The landlord cannot forfeit for a breach unless the lease gives them that right.
For non-payment of rent, a landlord can forfeit by peaceable re-entry, which means physically re-entering the property and changing the locks, without a court order, but only where the premises are unoccupied. If anyone is living or working in the property, re-entry without a court order is a criminal offence under the Criminal Law Act 1977. In practice, landlords almost always obtain a court order to avoid the risk of criminal liability.
For breaches other than non-payment of rent, the landlord must first serve a Section 146 notice under the Law of Property Act 1925 specifying the breach, requiring the tenant to remedy it if capable of remedy, and requiring the tenant to pay compensation. Only if the tenant fails to remedy the breach within a reasonable time can the landlord then take steps to forfeit.
A landlord who knows about a breach but then does something that recognises the lease as continuing, such as accepting rent, waives the right to forfeit for that breach. Waiver is a significant trap for landlords: accepting even a single rent payment after discovering a breach can extinguish the right to forfeit for it. Any landlord considering forfeiture should take legal advice before accepting any payment from the tenant.
Tenants have the right to apply to the court for relief from forfeiture, which is an order restoring the lease on terms. Courts are generally willing to grant relief for non-payment of rent where the tenant pays all arrears and costs. For other breaches, relief is discretionary and depends on the nature of the breach and the tenant's conduct. Residential tenants have additional statutory protections against forfeiture.
Forfeiture allows a landlord to end a lease early for tenant breach where the lease contains a forfeiture clause. For non-residential premises, peaceable re-entry is possible but legally risky. A Section 146 notice is required for non-rent breaches. Waiver extinguishes the right to forfeit. Tenants can apply for relief from forfeiture. Both landlords and tenants should take specialist legal advice before any forfeiture action.
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