A well-drafted lease agreement will usually contain a clause setting out the circumstances in which the tenant can be compelled to forfeit his remaining term under the lease. Those circumstances will depend, among other things, on the length of the lease and the nature of the leased property. In most short leases, a landlord will insist that the tenant forfeit his term in the event any breach of covenant (see LeaseholdCovenant) but, of course, this is something for the prospective landlord and tenant to negotiate before signing. The forfeiture clause is usually eumphemistically worded as a landlord's `right to re-enter' the property.
The law does not imply a forfeiture clause into any lease; so if there is no such clause, the landlord has, in general, no right to seek forfeiture, however destructive the tenant's behaviour. It is not unusual for leases to omit a forfeiture clause, and of course a lease granted informally, or by implication, will very likely not include one. In such circumstances, whether the landlord can lawfully eject the tenant or not depends on the nature of the tenancy; if it falls within the requirements of an AssuredTenancy or AssuredShortholdTenancy the landlord can apply to the court for forfeiture on a number of grounds. For longer leases, if there is no provision for forfeiture the landlord might have to seek an injunction to restrain the bahaviour of an intransigent tenant, although this is hardly satisfactory. The LawCommission has recommended a statutory implicate of a forfeiture term into all leases, although as yet nothing has come of this.
Assuming that there is provision for forfeiture, the enforceability of the provision is modified by a number of statutory and common-law provisions.
Before discussing the usual procedure of effecting forfeiture by serving notice, it is worth bearning in mind that it remains possible -- at least at present -- to effect forfeiture by re-entry, provided that the property is not a dwelling. The normal process is simply to change the locks on the building. However, if the landlord meets the slightest resistance to this action, anything done to overcome this resistance is likely to amount to a criminal offence. In practice, therefore, this method of forfeiture is only ever recommended where the property is empty.
The basic procedure for forfeiture except for non-payment of rent in certain domestic tenancies is set out in s.146 of the LPA1925. Thelandlord must serve a notice setting out:
On receipt of the notice the tenant may apply to the court for relief. In practice the court will usually grant relief (which means, in this case, denying the landlord the right to forfeiture) where the breach is minor compared to the loss that the tenant would suffer upon forfeiture. However, relief cannot be granted if the landlord has already re-entered.
s.146 also applies where the forfeiture is for non-payment of rent, but there are additional complications. First, in a domestic periodic tenancy, the recovery procedures of the Housing Acts apply. These are beyond the scope of this article. Second, various archaic procedures contine to apply. In particular, if the rent is less than six months in areas, the landlord must make a formal demand at the premises between the hours of sunrise and sunset. It is common for the lease to include a provision waiving this requirement.
Another difference is that the court can grant relief even after the landlord has reentered. The time periods within which relief must be sought depend on whether the action is started in the HighCourt or the CountyCourt.
Where the landlord seeks forfeiture for breach of a covenant to repair, the basic provisions of s.146 of the LPA are ammended by s.1 of the LeaseholdPropertyRepairsAct1938. To claim the benefit of the 1938 Act, the lease must have three or more years left to run, and the tenant must serve a counter-notice to that effect within 28 days of the service of the landlord's s.146 notice. In such circumstances, the landlord cannot proceed against the tenant without leave of the court. The 1938 Act sets out the circumstances in which leave should be given: in essence the landlord must demonstrate that the lack of repair is causing a substantial loss of value to the property, or that the cost of delaying repair will far outweigh the cost of making the repairs immediately. There is also a provision that the court may give leave where it is `just and equitable' to do so, and may impose conditions on the tenant where leave is refused.
The HousingAct1996 s.81 puts an end to the pernicious practice that some unscrupulous landlords adopted, of increasing service charges to the point where the tenant could not afford to pay, then seeking a forfeiture order. In short, there can be no forfeiture unless the amount is agreed by the tenant, or set by the Leasehold Valuation Tribunal.
The breach of any term in a lease agreement amounts to a breach of contract. As in any other contract, the innocent party must seek a rememdy promptly, or he will deemed to have affirmed (that is, accepted) the breach. In the case of breach of a leasehold covenant, it is crucial that the landlord cease to collect rent from the tenant as soon as the breach is evident. If the landlord continues to collect rent, the court will usually take this as evidence that he has affirmed the breach, and has thereby waived his right to re-enter.
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