In today’s tough economic times, it’s hardly surprising that some tenants struggle to make their rental payments. It’s imperative that you don’t take rash measures when dealing with a tenant as doing so can result in a lot of legal trouble.
Fortunately, enforcing a commercial lease forfeiture can help you deal with tenants defaulting on their rental obligations. However, implementing this right is not exactly straightforward and requires you to enlist the help of an expert.
What exactly is a forfeiture?
The right to forfeit enable you as a landlord to re-enter a property after a tenant breaches the terms of your rental agreement and terminate their lease. The termination is dependent on forfeiture reason and can happen immediately or after a period of notice. For you to force a tenant to forfeit their contract, you need to establish that you have the right to enforce it.
Therefore, you must rely on a specific clause in the lease agreement that outlines the particular circumstances that warrant a forfeit. In some individual cases, you can exercise the right to forfeit even in the absence of a specific clause on the lease.
What are the special circumstances?
When a tenant breaches a condition that is key to the rental agreement, the right to force a forfeit automatically rises. However, you should seek and follow legal advice to be sure that the breach goes to the root of the contract. Attempting to enforce a forfeit in the absence of an explicit right can mean that you, the landlord, have committed a breach. Seek legal advice as soon as this happens to help you determine the best course of action.
Before trying to exercise the right to forfeit, you need to be sure that the clause you’re relying on adequately covers the breach and that all preconditions are complied with. Such a move will help you identify situations that warrant a particular requirement. For instance, bankruptcy cases where a corporate tenant is in administration requires you to obtain permission from the courts. Or get the administrator to consent before the lease can be forfeit.
Once you have the right to forfeit, you must follow the statutory notice procedure before terminating the lease. If the breach doesn’t pertain to non-payment of rent, you need to serve the tenant with a Section 146 notice. The notice allows the tenant time to remedy the breach in question.
The notice must highlight the breach and explain the possible remedy if possible and request a solution that can include monetary compensation. If the tenant fails to comply or respond to this notice with the stated time frame or pay a reasonable fee, then you can exercise the right to forfeit.
Even when you have the right to re-enter your premises, you should proceed cautiously to avoid committing a criminal offence. While a peaceful re-entry is a preferable means, it comes with a host of other challenges that have additional costs. Liaising with an expert service increases your chances of success.