Forfeiture

Forfeiture is a Landlord’s right to determine a lease and take back its property where a tenant is in breach of its obligations under a lease. 

Forfeiture for Commercial Property

Commercial Landlords should consider whether forfeiture is an appropriate step in all the circumstances.  Key considerations will include whether it is in the Landlord’s commercial interests to take back the property.  This may be particularly salient in a receding economy, in which it may be difficult to identify a new tenant.  If a new tenant is not found, the Landlord may be liable for outgoings during any void period.  These would include business rates, insurance costs etc. 

There may also be an original tenant (in the forfeiture of a sub-lease) or guarantor who will be let off the hook by the forfeiting of the lease.  Alternatively, do the terms of the guarantee mean that the guarantor automatically takes a new lease on forfeiture, is that desirable?  Would there be security issues with the property being empty?  For example, would it be at risk of being occupied by squatters?

On the other hand, forfeiting the lease will mean that the Landlord regains control, provide an opportunity for any development works to take place and offers the prospect of putting in a place a higher calibre tenant.

Forfeiture for Residential Property (Long Leases)

Forfeiture is also open to Landlords of residential property under a long leases where the Tenant is in breach of covenant.

The Lease must allow a Lessor to initiate forfeiture proceedings, which is a common provision.

Examples of where forfeiture has been allowed by the Courts in respect of residential property include where a Lessee altered a kitchen without licence from the Lessor, a failure to pay ground rent or services charges or even leaving a property unoccupied with no forwarding address.

The pre-cursor to forfeiture proceedings is the Lessor serving a Section 146 Notice on the Lessee for breach of Lease.  The Lessor needs to give the Lessee the opportunity to remedy the breach(es).  If not remedied, the Lessor may apply to the Court for possession.

A Lessee may make an application for relief from forfeiture.  The Court has a wide discretion to Order relief from forfeiture based on the conduct of the parties and all the circumstances of the particular case.

How the Court decide whether to allow forfeiture or to grant relief

The law around the concept of forfeiture is complex.  In order to make an Order for forfeiture, there must be a breach of lease that is “substantial”, it must be capable of being remedied, the Tenant/Lessee must have been given notice of the breach and the opportunity to remedy it and the breach must not have been waived by the Landlord/Lessor.

If a Landlord/Lessor can meet those requirements, then they are entitled to apply to the Court for a Possession Order and seek to forfeit the Lease.

The Court will consider the application on the basis of the “balance of convenience”.  This means that the Court will “weigh up” the competing interests of the Landlord/Lessor, in enforcing the Lease, against the Tenant/Lessee, who seeks to retain possession.  The Court will consider various factors including the nature and severity of the breach, the degree of hardship that the forfeiture will cause the Tenant/Lessee, the extent to which the Tenant/Lessee has complied with the Lease in the past and the Landlord’s/Lessor’s willingness to negotiate with the Tenant/Lessee.

The Leasehold Reform (Forfeiture) Bill, currently at Second Reading stage, anticipates an overhaul of the rules relating to residential forfeiture.  Watch this space.

We regularly advise commercial and residential clients on forfeiture, both on behalf of Landlords, Lessors, Lessees and Commercial Tenants.  Get in touch if you need advice in relation to this subject matter.

Why Ridgemont?

Ridgemont’s team is made up of expert senior solicitors, all of whom previously worked in “Big Law” (i.e. the top 50 law firms in the UK).

We provide bespoke advice tailored to your needs.  Our advice is commercial and pragmatic, enabling you to use it effectively to make business decisions.

We have an expert understanding of [real estate law. We can guide you through the maze of forfeiture.

We are user-friendly.  Our lawyers speak in plain English, providing service levels akin to “Big Law”. We have built our processes to make onboarding as pain-free as possible. Our fee earner structure means that you have access to a partner-level solicitor at all times and they will always be on top of your matter.

We operate our business in an ethical way.  That means we think about what the “right thing to do” is when making a business decision.  As an example, we do not charge a default unit of time for incoming emails or letters as we think we ought to be paid for work done, not for merely receiving correspondence. We are also open and transparent on what we charge, meaning our clients never receive a surprising invoice.

We provide “Big Law” service levels and quality of advice, with expert senior solicitors providing commercial, pragmatic advice. Necessarily, that does not come cheap as we have to invest in great lawyers and everything they need to do their job. However, due to us having comparatively lower overheads to “Big Law” firms, we are able to charge less than they would for providing the same service levels and advice.

We are proactive in finding innovative ways to advise our clients in a cost proportionate way.

Who we act for?

We act for commercial Landlords and commercial tenants.  We also act for Prime Central London residential tenants.

Your journey with us
  1. Get in touch using the contact form below, calling us on 0203 909 9590 or emailing us at contactus@ridgemont.co
  2. We guarantee that we will be in touch with you the same day to listen to your needs and to explain how we can help and the likely cost.
  3. Assuming you wish to engage us, we will then onboard you as a client, which normally takes a matter of hours.
  4. From there, you will be assigned an experienced solicitor who will have conduct of your matter from cradle to grave and be available to speak to you and responsive to emails at every juncture.

You can learn more about our journey by watching these videos.

24 Greville Street, London, EC1N 8SS

KEY CONTACT: John Wallace

Founder and Head of Real Estate

Head Office

24 Greville Street,
London, EC1N 8SS

Bristol Office

St Nicholas House, 31-34 High St, Bristol, BS1 2AW
[Appointment only]

Get in touch with us

Scroll to Top