When Can A Landlord Forfeit A Lease?

Landlords: How to End a Commercial Property Lease

What Is A Forfeit / Forfeiture of a Lease?

Forfeiture or peaceable re-entry is the landlord’s right to end a commercial lease in the event of a breach by the tenant.

When Can a Landlord Forfeit A Lease?

  1. In breach of any of its obligations under the commercial lease (including the payment of rent); or
  2. On the occurrence of certain events specified in the commercial lease (a common example of this is the tenant’s insolvency).

DON’T WAIVE GOODBYE TO THE RIGHT TO FORFEIT A LEASE

Forfeiture is subject to various statutory and common law limitations. If the landlord wishes to protect their right to forfeit the lease, they should be careful when dealing with the tenant and any other connected parties in relation to the property (especially where the right to forfeit a lease has already arisen). When looking to forfeit a lease, it is essential that a landlord does not waive its right to forfeit the lease inadvertently.

When will waiver occur?

Waiver of the right to forfeit the lease will occur when the landlord – with knowledge of the tenant’s breach – performs an unequivocal act that recognises the lease as continuing to exist and communicates that act to the tenant. Beware, this can include the acceptance of rent or even merely entering into discussions with the tenant which may be deemed by the court as the landlord recognising that the lease is continuing.

If you are a landlord and are considering forfeiting a lease to remove a tenant from a property, it is important to first take considered and specialist legal advice as to how best to approach this. If the process is not followed correctly a tenant may successfully apply to gain re-entry to the property, an unquestionably costly exercise for a landlord.

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