One issue we often encounter with commercial leases are the rights of the landlord in the event of non-payment of rent of other breach of a tenant’s obligations.
Usually, commercial leases will give a Landlord the right to re-enter the premises in the event of a breach of covenant. In practice, this contractual right is most usually exercised in the case of rent arrears.
However, it should be noted that a commercial tenant is entitled to apply to the Court for ‘relief against forfeiture.’ The question is, how long can a tenant wait before applying for such relief, and how long should the landlord wait before attempting to re-let the property?
If a commercial tenant leaves premises owing substantial arrears, the Landlord can ‘peaceably’ take the premises back and re-let them.
Previously accepted thinking has been that it would usually be safe to grant a lease to new tenants after waiting 6 months without an application for relief being made.
However, in a 2016 case, the Court granted relief in a case where the tenant had waited 14 months before their application.
Fortunately, the Landlord in that case had not re-let the premises, but if they had they would have had enormous problems having both granted a new Lease and receiving rent, but being legally obliged to return the premises to the previous tenant.
Currently, Landlords would be better advised to follow the more certain route of applying to the court themselves for an ‘order for possession.’
Whilst this would naturally incur legal costs, only by obtaining an Order for possession can a Landlord be certain of their ability to create a new lease unencumbered by the previous tenants.
Richard Webster & Co. are specialists in commercial conveyancing and landlord and tenant disputes, so if you are a commercial landlord who is having difficulties with your tenant, please do contact us for a free initial consultation.
Philip Bellamy is a solicitor at Richard Webster & Co. which is a firm specialising in both commercial and residential property and conveyancing and is accredited by The Law Society’s Conveyancing Quality Scheme (CQS). Please do not hesitate to contact Philip on 023 8000 4321 for any queries that you may have in relation to any property matters.
This article does not present a detailed statement of the Law and does not constitute as legal advice. This is a summary only and legal advice should always be sought on an individual case basis.