What is Lease Forfeiture?

Full Definition

Lease forfeiture is a landlord's legal remedy allowing them to bring a lease to an end early and repossess the property where the tenant has breached a term of the lease, most commonly non-payment of rent but also other breaches such as unauthorised subletting, failing to keep the property in repair, or an unlawful change of use, provided the lease contains a forfeiture clause (sometimes called a "proviso for re-entry"), which almost all commercial and long residential leases do. For non-payment of rent, a landlord can forfeit either by "peaceable re-entry" -- physically changing the locks while the property is unoccupied, without needing a court order, though this route carries real practical risk and is unavailable for residential property let as a dwelling -- or by court proceedings seeking a possession order, which is the only lawful route for occupied residential property and is generally the safer approach for commercial premises too, since an unlawful re-entry can expose the landlord to a damages claim from the tenant. For breaches other than non-payment of rent, a landlord must first serve a formal notice under section 146 of the Law of Property Act 1925, setting out the breach, requiring it to be remedied within a reasonable time (if it is capable of remedy), and requiring compensation if the landlord wants it, before forfeiture proceedings can begin; for residential long leases (over 21 years), additional protections under the Commonhold and Leasehold Reform Act 2002 also generally prevent forfeiture for unpaid service charges or administration charges unless the amount is either agreed by the tenant, admitted, or determined by a tribunal or court, precisely to stop leaseholders losing valuable flats over comparatively small disputed sums. Critically, a tenant facing forfeiture can apply to the court for "relief from forfeiture," asking the court to reinstate the lease, typically by paying off the arrears (plus the landlord's reasonable costs) or remedying the breach, and courts are generally sympathetic to relief applications, particularly for long residential leases where the value of the tenant's interest can be many times greater than the debt that triggered forfeiture, meaning landlords rarely end up actually keeping a forfeited long lease if the tenant applies for relief promptly and can pay what is owed. Because of the procedural strictness, the risk of a wrongful forfeiture claim, and the tenant's strong prospects of obtaining relief in most cases, landlords increasingly treat forfeiture as a last-resort pressure tactic to recover arrears or force compliance, rather than a reliable way to actually regain possession of a valuable property.

See Also