Leases generally contain a right for the landlord to bring a lease to an end before the fixed term if the tenant breaches any of the covenants. Where property is occupied this requires the landlord to pursue forfeiture proceedings through the courts.
If the breach of covenant is for non payment of rent then the landlord must normally make a formal written demand for the outstanding sums before resorting to forfeiture proceedings. Many leases contain a provision for landlords to reclaim possession of the property ‘whether rent is formally demanded or not’ but lack of a formal demand is unusual.
Where forfeiture proceedings are brought for other types of covenant breach, the landlord must follow the procedure set out in the s146(1) of the Law of Property Act 1925.
Under the legislation, tenants can seek relief from forfeiture before or after proceedings have been issued.
What is a Section 146 Notice?
Before a landlord can start forfeiture proceedings other than for non payment of rent, it must serve the tenant with a Section 146 Notice containing a number of details. The notice must set out the breach of covenant, it must request that the tenant remedies the breach and it must set out any claim for financial compensation made in relation to the breach.
Once the tenant has been served with a Section 146 Notice it can seek relief from forfeiture immediately.
Relief from Forfeiture
Relief from forfeiture may be granted before or after forfeiture proceedings have begun in court. If the breach is for non payment of rent and all the sums due under the lease are paid by the tenant then the court will automatically grant relief.
Where other breaches have taken place, the court has wide discretion to grant relief and will look at all the circumstances of the breach including the nature and seriousness of the breach and the conduct of the parties. Where a breach is deliberate or persistent for example, it is less likely that the court will grant relief.
Tenants will generally need to remedy any breach within the time limits imposed by the court to prevent their lease being terminated permanently. The remedy will normally seek to place the landlord in the same position as if the breach had not occurred. Therefore, damages may be applied to any losses caused by the breach.
If the tenant fails to comply with any conditions of the relief then relief will not be granted.
Tenants struggling to meet their obligations under a lease should seek legal advice in order to head off potential problems before they become overwhelming. Tenants facing the threat of forfeiture should seek immediate legal advice. For specialist help contact Peter Gourri today by email PGourri@rollingsons.co.uk or telephone 0207 611 4848.