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What is forfeiture of lease by peaceable re-entry?

What is forfeiture of lease by peaceable re-entry?
What is forfeiture of lease by peaceable re-entry?

Recover Debts by Peaceable re-entry with Clearway

For help and advice with carrying out forfeiture of a lease by peaceable re-entry, get in touch with Clearway Today.

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IF a COMMERCIAL TENANT STOPS PAYING RENT, THEN YOU MAY BE ABLE TO FORFEIT THEIR LEASE BY PEACEABLE RE-ENTRY.

Commercial tenants who stop paying rent can cost landlords dearly if not dealt with swiftly and efficiently. A landlord’s right to re-enter a commercial property and forfeit the lease offers them some security as it allows them to claim back the property if the tenant isn’t holding up their end of the deal.

Although there may already be some outstanding rent owed, forfeiting the lease puts a swift end to the problem, preventing it from spiralling further and becoming more costly than it already is.

There are two ways that a landlord can forfeit the lease; by issuing proceedings at court, or by peaceable re-entry.

Disclaimer: The information provided on clearway.co.uk is intended for general informational purposes only and should not be construed as advice or relied upon as a substitute for professional legal counsel on the subject of debt, lease or eviction-related matters. Any reliance you place on the information provided on clearway.co.uk is strictly at your own risk. We shall not be liable for any loss or damage, including without limitation, indirect or consequential loss or damage, arising from the use of, or reliance on, the information presented on this website.

What Is Peaceable Re-entry?

Peaceable re-entry is the act of physically turning up at the property, re-entering, and securing it, usually by changing the locks.

This is usually the preferred method of forfeiture as it is quick, simple and affordable for the landlord.

Peaceable re-entry cannot be performed whilst the tenant is on the property and should never be attempted if anyone is using the property as their home.

If the tenant still has goods at the property when you take possession of it, then these will need to be dealt with during the process of commercial rent arrears recovery (CRAR).

Unlawful acts of peaceable re-entry can put the landlord at risk of being charged damages for trespass, so the act should always be carried out with care.

Related reading: If you’re a commercial landlord, clearviewBI can help to consolidate and manages in real-time corporate tenants, analysing and generating enhanced visibility into corporate distress and the potential for rent default. This means you can anticipate problem clients before the need for peaceable re-entry. You can read more about clearviewBI here: https://www.clearway.co.uk/clearviewbi/.

The legalities of peaceful re-entry

While peaceable re-entry can be a straightforward solution to problematic commercial tenancies, often where the tenant is persistently behind with rent or has made no attempt to bring their rental arrears up to date, the process is all important.

Lease forfeiture through peaceable re-entry is relatively low cost, but the ‘peaceable’ aspect simply means that the landlord re-enters the property without requiring a formal court order or eviction notice.

If the landlord needs to break or remove locks to access the property, they must work with an authorised and certified bailiff.

Several conditions must be in place before a landlord can move ahead with peaceable re-entry, initially to verify whether the lease terms and situation allow them the right to re-enter the property.

Some tenancies cannot be ended through forfeiture, although this normally applies to residential leases rather than commercial tenancies. A commercial lease needs to include clauses relating to re-entry to ensure the landlord has the right to re-enter the premises and forfeit the lease.

The lease must also not include a clause that states the landlord needs to issue a formal demand before they can peaceably re-enter the property.

If there isn’t such a clause, the landlord needs to make a formal demand, usually in person and within specific hours, with two separate visits, with the second on the final day the tenant can repay their debts before the landlord has the right to forfeit.

Complexities in Peaceable Re-Entry Due to Non-Payment of Rent

Non-payment of rent or other service charges is the most common reason a commercial landlord finds themselves in a position to consider peaceable re-entry, but the right to forfeit the lease isn’t always immediately granted because a tenant is behind on payments.

Commercial leases vary, but many include clauses that state forfeiture is possible a certain time after rent has become overdue, usually 14 or 21 days afterwards.

Landlords also need to move decisively once they reach a situation where a lease forfeiture through peaceable re-entry is allowed. For example, if the rent is unpaid, and the landlord does not move ahead with forfeiture and acts as though the lease is continuing, they might contradict their right to forfeit the lease.

Although there is rarely any reason a landlord cannot initiate a new right to forfeit in the future, such as in a subsequent non-payment, they should be cautious of inadvertently waiving their own right to forfeit.

An example would include accepting rental payments against subsequent periods of tenancy without initiating a lease forfeiture due to non-payments in previous periods.

Physically Entering a Commercial Property Following Lease Forfeiture

As previously mentioned, a landlord cannot peaceably re-enter a premise which is physically occupied, so they need to confirm that nobody is present and likely to oppose the re-entry. Actioning a re-entry when the property is occupied can be considered an offence under the Criminal Law Act 1977.

Certified bailiffs are allowed to break or remove locks to allow the landlord re-entry but cannot use force against a person, so they will take action to verify that the property is empty. Most peaceable re-entries happen in the early hours to avoid any potential for conflict or confrontation.

Next, the landlord or their bailiff will enter the property and change the locks to prevent the tenant from gaining access. They must erect a sign outside, without any specific rules around the wording, stating that:

  • The landlord has changed the locks.
  • The lease has been forfeited via peaceable re-entry due to non-payment.
  • From the re-entry date, the lease is now terminated.

Although, in some scenarios, the tenant may be able to apply for relief from lease forfeiture, peaceable re-entry is normally final and must be unambiguous in stating that the tenant no longer has a right to enter the premises and the lease has been forfeited.

Tenants can apply for forfeiture relief, but to be successful will usually have to bring all rental arrears up to date and pay all the landlord’s costs linked with the forfeiture. There is no automatic entitlement to relief, and if the landlord has already given access rights to a new tenant or another third party, it is very unlikely relief would be granted.

Dealing With Tenant’s Property After Peaceable Re-entry

Landlords cannot dispose of goods, possessions or property belonging to the tenant and can find themselves exposed to damages claims or insurance issues if goods are destroyed or damaged without the tenant having the opportunity to reclaim them.

Much depends on the nature of the unpaid debt, and in some scenarios, the landlord may have legal recourse to sell fixtures to recoup some of their damages, but they will usually need to make arrangements for the tenant to remove their items. In other cases, the landlord may need to provide formal notice that they are clearing the premises, where goods remain on site.

For help and advice with carrying out forfeiture of a lease by peaceable re-entry, speak to one of the enforcement agents at Clearway by giving us a call for free on 0800 002 9049.

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