Commercial landlords know that if a tenant fails to pay rent and
the lease contains a forfeiture clause, the landlord can forfeit
the lease by peaceable re-entry i.e by changing the locks when the
tenant is not in the premises. It can be a useful self-help remedy
but it is limited by the tenant's right to claim relief from
forfeiture and get back into the premises if he pays the rent
arrears and associated costs.
The long held belief that a tenant has about 6 months to make
its claim for relief from forfeiture but is now in some doubt from
the recent case of Pineport Limited v Grangeglen Limited,
where the court granted relief upon an application made some
14 months after forfeiture.
For landlords of industrial premises, the facts of the Pineport
case were unusual, in that the tenant had a long lease (125 years)
of an industrial unit in Southall. The tenant had paid a premium of
£90,000 for the lease and paid rents of £100 a year.
Following forfeiture in April 2014, the tenant did not apply for
relief until June 2015.
In court the landlord argued that the delay in making the
application was significant and that relief should be refused for
that reason. The court however said that the delay was just one of
the factors to consider, rather than an initial hurdle to overcome
and also took into account the following facts:
the tenant had mental health issues
which had prevented a timely remedy of the situation;
the steps that the tenant had had to
take to sell other assets to pay the arrears;
the value of the lease compared to
the outstanding arrears (£275,000/£24,000);
the lack of prejudice to the landlord
the landlord's failure to market
or let the property on a new long lease.
Clearly, points 3-5 were material to the court's
consideration and its decision that the application had been made
with reasonable promptitude. One can envisage a different
consideration if the property had been re let or if the lease was
of little value in comparison to the arrears, but yet it is still a
reminder that the assumptions we make are just that. We cannot
guarantee that a tenant will not succeed in a "late"
relief application and this risk must always be weighed in any case
of peaceable re entry. We can try to get undertakings from tenants
not to proceed, although these are not a very realistic prospect
and we should always push for indemnities from incoming tenants to
protect the position as far as we can.
When a landlord forfeits because it has a new tenant lined up it
has to explain how the premises came to be vacant. It's in the
usual CPSEs. When recent forfeiture is disclosed landlords know
they have to offer an indemnity against the risk that the courts
could reinstate the old lease. This request will be made for older
forfeitures now. Surrenders of the lease can be a better solution
in this situation if landlords can get the co-operation of their
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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