What is lease forfeiture and possession?
Lease forfeiture and possession is what is commonly referred to as a landlord’s ‘ultimate sanction’; the ‘nuclear option’ if you will, in circumstances when breaches of a lease, whether remediable or irremediable cannot be resolved by mediation or when actions to recover debts in the County Court prove ineffective.
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Lease forfeiture – what happens?
The effects of lease forfeiture and possession are:
1) To terminate the lease with no compensation payable to the leaseholder.
2) Allow a landlord to re-possess the property.
3) Allow the landlord to re-let the demised premises to a new leaseholder willing and able to comply with the conditions of the lease.
When can a landlord legally exercise their right of forfeiture and possession?
The following circumstances might make this right available:
1) A leaseholder having undertaken unauthorised alterations.
3) Failure to upkeep the property.
4) Non-consensual assigning or underletting.
5) The immoral use of premises.
6) A change in the permitted use of the property.
Lease forfeiture – the need for expert legal advice
It is very important that landlord gets specialist legal advice to ensure that exercising their right of forfeiture and possession is lawful. A failure to ensure the lawfulness of this course of action before embarking on it could potentially expose a landlord to a damages claim brought by the leaseholder.
The landlord and his solicitor would as a rule carefully address the following considerations before deciding whether proceed:
1) Whether the lease contains the appropriate clause permitting the right to forfeiture and possession for the breach in question and specifically a right of re-entry. This is the primary consideration
2) Whether the landlord would be better off with the existing leaseholder rather than possibly no leaseholder at all in the short term
3) The length of time it would take to find a new leaseholder
4) Changes to the level of ground rent under a new lease
Lease forfeiture – major pitfalls to avoid
1. Unsuccessfully attempting peaceable re-entry
When leases have a re-entry clause permitting the landlord to re-enter a property under certain circumstances (which cover the breach in question), possession can be obtained by ‘peaceable re-entry’ without recourse to legal action. The locks are then changed and the leaseholder’s possessions removed from the property. Get this procedure wrong by using or threatening violence against the occupier of the property or the property itself and you will find that you have committed an offence under the Criminal Law Act 1977. In view of all that could potentially go wrong, peaceable re-entry is generally not recommended.
2. Waiving your right to forfeit
A landlord will waive their right to forfeit if they satisfy the following three conditions:
i) The landlord is aware of their leaseholder’s breach and then,
ii) Performs an act that recognises unequivocally that the lease still exists or is continuing. Such acts of waiver covers a wide range of action, so any landlord has to be particularly careful – e.g. if they serve a notice under the lease, request or even receive any sums due under the lease, on any basis- even just arranging to inspect the lease premises could be seen as an act of waiver
iii) They communicate this act to the leaseholder (see ii).
A specialist leasehold property solicitor can advise you about the importance of avoiding taking any action that could be seen as a potential acts of waiver and will ensure that any communication with the leaseholder or their representative is on a ‘without prejudice’ basis.
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As you can see, forfeiture and possession involves a complex area of the law and one where the right expert legal advice can make a crucial difference. Don’t take a chance with lease forfeiture – contact our specialist team today.
We can represent you where ever you live, provided the property in question is in England and Wales.
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