What a relief!
- AuthorEmily Arnold
Forfeiture is a remedy that can allow a landlord to terminate a lease if the tenant does not make payments of rent.
In the case of commercial property, the lease can be forfeited by way of peaceable re-entry - ie changing the locks. But this robust action needs to be planned and considered carefully.
If a landlord forfeits a lease when it has no right to do so, then the act of carrying out peaceable re-entry can expose the landlord to a claim for damages or trespass. If a tenant’s business is disrupted, the damages claim can be substantial.
If a tenant’s lease is forfeited, the tenant can seek relief from forfeiture by applying to either the County Court or the High Court. Seeking relief is essentially a request for the Court to order that the lease be reinstated.
In the County Court, an application for relief must be brought within 6 months of the date of the landlord re-entering the premises. The sooner the application is brought, the better. The Court will look unfavourably upon unreasonable delays.
Until recently, it had not been clear whether the Court could refuse to grant relief where the tenant had delayed making the application but where it had nevertheless been brought within the 6 month time limit.
This issue has been recently discussed and the principles clarified in the case of Kashwala v Bhalsod.
The Claimants issued their claim for relief from forfeiture 4 months after the landlords effected forfeiture by re-entry. The County Court Judge exercised his discretion and refused to grant relief. The principal basis for this decision was that the tenants had not made the application promptly. The Judge’s view was that the delay in seeking relief had not been properly explained.
The tenants appealed the decision and the appeal was granted.
It was made clear by the appeal Judge that the starting point in exercising relief from forfeiture is that if the rent arrears are paid, relief should follow, unless there is some exceptional reason why it would be unjust to grant relief. The question for the Court to decide was whether or not the delay in bringing the claim created exceptional circumstances justifying the refusal of relief.
The Judge hearing the appeal confirmed that an application that was brought within 6 months is automatically to be taken as having been brought with reasonable promptitude.
It seems therefore that, in the County Court at least, if an application for relief from forfeiture is brought within the 6 month statutory time limit, it is unlikely to be refused for not having been made with reasonable promptitude.
Landlords must keep in mind that although physical re-entry for non-payment of rent is an appealing remedy (achieving a result swiftly), it does carry a risk that the tenant might be allowed back into occupation of the property if an application for relief is granted.
If you would like any advice in relation to landlord and tenant matters, please do not hesitate to contact Emily Arnold on 01242 574 244.