Frequently Asked Questions on Forfeiture of Commercial Leases

1. What is forfeiture of a commercial lease?

Forfeiture is a contractual right that allows a landlord to bring a commercial lease to an early end when the tenant has breached the lease. Most leases contain a forfeiture clause specifying the circumstances where this right can be used, such as rent arrears or other breaches of covenant.

2. When can a landlord forfeit a commercial lease?

Forfeiture is usually available when the tenant has:

• Failed to pay rent,
• Breached another lease obligation (e.g., repair, use, alterations),
• Triggered an insolvency-related clause.

The lease must contain an express right of re‑entry for the landlord to forfeit.

3. Do landlords always need to serve a Section 146 notice?

A Section 146 notice is required for most breaches except rent arrears. For rent arrears, the landlord can forfeit without serving a notice (though conditions in the lease must still be met).

4. How can a landlord forfeit a commercial lease?

There are two main methods:

1. Peaceable re‑entry

Changing the locks to regain possession—usually through an enforcement agent.

2. Court proceedings

Issuing a possession claim for a court order.

Landlords should take advice before choosing a route, as the risks differ.

5. Can a tenant ‘stop’ forfeiture?

Yes.
A tenant can:

• Pay overdue rent promptly (in rent arrears cases),
• Remedy the breach if possible,
• Apply to the court for relief from forfeiture.

Relief, if granted, restores the lease as if it was never forfeited.

6. What is “relief from forfeiture”?

This is the tenant’s right to ask the court to reinstate the lease after forfeiture.
Relief is discretionary, but the court often grants it if:

• The breach is remedied,
• Arrears and costs are paid,
• The tenant acts quickly.

7. Can a landlord accidentally lose the right to forfeit? (Waiver)

Yes.
If a landlord knows about a breach but then acts as though the lease continues—for example, by accepting rent—this can waive (cancel) the right to forfeit for that breach.

Waiver is a common and serious pitfall for landlords.

8. What actions might amount to waiver?

A landlord may waive forfeiture by:

• Accepting rent after knowing about the breach,
• Demanding rent,
• Communicating with the tenant as if the lease is continuing (e.g., discussing future obligations),
• Granting permissions or otherwise dealing with the tenant in a way inconsistent with ending the lease.

Once waived, the landlord cannot rely on that specific breach to forfeit.

9. Can forfeiture be used during insolvency situations?

It depends on the wording of the lease and the type of insolvency.
Many leases allow forfeiture if the tenant or guarantor becomes insolvent, but the courts often require clear, proven insolvency before the right can be exercised. Legal advice is essential in insolvency‑related forfeiture.

10. What happens to the tenant’s goods after forfeiture?

Goods left at the premises remain the tenant’s property.
The landlord cannot simply dispose of them and must follow the Torts (Interference with Goods) Act procedures.

11. Is forfeiture always the best option?

Not necessarily.
Depending on the circumstances, alternatives may include:

• Negotiating a repayment plan,
• Pursuing a debt claim,
• Appointing a receiver,
• Seeking damages for breach.

Forfeiture is a powerful remedy but can have commercial drawbacks—especially if re‑letting the property may take time.

12. How quickly does a tenant need to act if forfeiture occurs?

Immediately.
Delays can reduce or eliminate the chance of obtaining relief from forfeiture, especially in cases involving rent arrears.

13. Do we need specialist legal advice?

Yes.
Forfeiture is a technical area with serious consequences.
Landlords risk waiver, unlawful eviction claims, or loss of the right to forfeit, while tenants risk losing their business premises. Early legal advice is crucial.

Written by David Bowers, Associate Solicitor, Judge & Priestley LLP. 

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