How to Gain Possession of a Commercial Property
11 April 2017 by Guest Author
As the landlord of Commercial Premises, there will be times when you are required to think about how you might re-enter your property and bring a commercial lease to an end. This could be for a number of reasons A tenant for example might not have a statutory right to a Lease renewal under the Landlord and Tenant Act 1954 or the tenant could have breached a term of the Lease. Below are a few points to consider in situations where you might want possession back again.
Expiry of the Fixed Term of a Contractual Term for a Contracted Out Tenancy
As a landlord, you might have a tenancy which was (1) contracted out of the Landlord and Tenant Act 1954 or, (2) the tenant does not satisfy the criteria for a new Lease under Section 23 or (3) the Landlord and Tenant Act 1954 did apply to the tenancy and either a Section 25 Notice or a Section 26 Notice did apply to the tenancy but no application to the Court for the determination of the terms of the new tenancy has been made.
If this is the case, you should notify the tenant in advance that possession of the property will be required at the end of the term. You should tell the tenant that if they remain in occupation following the expiry of the tenancy agreement, you will treat them as being a trespasser. In these circumstances it is advisable that the landlord does not accept any rent past the end of the contractual term to ensure that no periodic tenancy is created.
Once the tenancy expires, the landlord can either change the locks or take back possession of the property or it could issue Court proceedings. If the landlord chooses to bring Court proceedings it is advisable that it gets in touch with a firm of solicitors prior to the expiry of the contractual term.
A Lease could contain a contractual right for either party to terminate the agreement before the end of the contractual term. It is important that the Notice must be served in accordance with the terms of the Lease. A valid Break Notice cannot be withdrawn without the agreement of both parties. If both parties do agree then the new term will be deemed to constitute the creation of a new tenancy.
In these circumstances the landlord has the option either to change the locks and take back possession of the property or to issue Court proceedings. Once again if the latter is considered then it is advisable that the landlord obtains legal advice prior to the expiry of the term.
Breach of Lease
The most common reason to seek possession of property is where the tenant has breached the terms of the Lease. The breach will allow the Landlord to forfeit the lease, bringing the terms to an end. Generally, there are two different types of breach of the Lease.
The tenant might have failed to pay the rent in accordance with the terms of the Lease. In these circumstances the landlord would be entitled to go into the property without having served any form of notice and re-take possession, depending upon the terms of the Lease.
In the event of any other breach of the Tenancy Agreement depending on the terms of the Lease the landlord must serve a Notice under Section 146(1) of the Law of Property Act 1925. A landlord cannot forfeit a Lease by peaceable re-entry or Court Proceedings until a Section 146 Notice has been served on the tenant.
Forfeiture does not occur until the actual re-entry of the property by the landlord or service of Court proceedings for forfeiture on the tenant. If a landlord chooses to go down this route it must not do anything between the times of serving the Section 146 Notice and attending Court that would indicate that it treats the Lease as continuing or it will waive its right to forfeit. The most common example of the waiver of the right to forfeit is the demand or acceptance of rent after the right to forfeit has arisen.
The tenant has a discretionary remedy for relief from forfeiture. If a landlord forfeits the Lease an application can be made by the tenant for relief from forfeiture as a counterclaim in a defence by a tenant or a third party to any claim for forfeiture of the Lease. Or in separate claim by the tenant or a third party who has a right to relief from forfeiture such as an under- tenant or a mortgagee.
As soon as the landlord has made it clear that he is pursuing forfeiture the tenant is able to apply for relief from forfeiture. The Court has a wide discretion as to whether or not to grant relief from forfeiture and if it does it can dictate the terms on which it grants relief.
Commercial Rent Arrears Recovery
There is a final option available to landlords which does not involve taking possession of the property. It applies mainly in circumstances where the tenant is in arrears of rent. The commercial rent arrears recovery route allows the landlord to instruct an enforcement agent to take control of a tenant’s goods and sell them in order to recover an equivalent value to the rent arrears without regaining possession of the property. This may well be advisable where the landlord does not want to regain possession of the property and incur the additional cost.
In conclusion there are a variety of different ways of dealing with tenanted breaches of the Tenancy Agreement or regaining possession of the property. It is best to talk to a solicitor to obtain professional advice upon which is the best route for you.
Credit – blog post written by Lawrence Adams.