Forfeiture of Lease
What is Forfeiture of Lease?
Forfeiture of Lease means the lease can be terminated and the property revert to the freeholder. This could arise if the leaseholder breaches the terms of the lease, such as non-payment of rent or breach of covenant. Forfeiture of Lease is appropriate to both residential and commercial leases.
An example could be a failure by a leaseholder to maintain their flat. The law restricts the use of forfeiture even where the lease has been breached. If an alleged breach is not admitted or agreed by the leaseholder the landlord will have to apply to the First-tier Tribunal or a court for a determination of the breach before they can start any forfeiture action.
A tenant is entitled to apply for relief from forfeiture, in some cases, even after the landlord has taken back possession. By asking for relief, the tenants is asking the court to restore the lease. Generally, the court will grant relief if the tenant pays off any arrears, puts right any breaches complained of and pays the landlord’s costs. However, relief is not usually granted where the landlord has evicted using bailiffs enforcing a court possession order. This is one of the advantages to landlords in forfeiting by court proceedings, rather than taking peaceable re-entry.
In some circumstances, a landlord may choose to waive a tenant’s breach of covenant. Such circumstances which have been held to constitute waiver include accepting rent due after the date on which the right to forfeit arose, demanding rent due after the breach, enforcing other covenants in the lease or granting licence to assign or sublet.
There is a restricted right to forfeit assured tenancies (and assured shorthold tenancies (ASTs), although if the AST has two months or less to run of a fixed term, has an exercisable break option, or is a periodic tenancy, it will be preferable to bring the tenancy to an end and obtain possession by giving notice
Hagen Wolf can assist both tenants in applying for relief and landlords in opposing relief applications.