Do I need a court order to forfeit a commercial lease?

Not usually. Where the premises are wholly commercial and the lease reserves a right of re-entry, the landlord can forfeit by peaceable re-entry without going to court. A court order is required where any part of the premises is let as a dwelling and someone is living there, and it is the safer route where the breach is disputed or the tenant is in administration.

What is waiver of the right to forfeit?

Waiver is any act by the landlord which treats the lease as continuing after the landlord knows of the breach. Demanding or accepting rent is the classic example. Exercising CRAR is another, because it is a remedy available only while the lease exists. Once waived for a particular breach, the right to forfeit for that breach is lost, so the decision to forfeit has to be made before rent is chased.

Can the tenant get the lease back after forfeiture?

Yes, by applying to the court for relief from forfeiture. For non-payment of rent the tenant can apply within six months of a peaceable re-entry, and relief is normally granted if the arrears and the landlord's costs are paid. For other breaches relief is discretionary. A landlord should not re-let on a long lease until the relief period has passed or the tenant has confirmed it will not apply.

What happens to the tenant's goods left in the premises?

The landlord holds them as an involuntary bailee. They cannot simply be thrown away or sold. The usual course is to inventory them, write to the tenant giving a reasonable period to collect, and if they are not collected, to serve notice under the Torts (Interference with Goods) Act 1977 before disposal. We inventory the contents on the day and prepare that correspondence.

Can I forfeit the lease and still recover the arrears?

The debt survives forfeiture, but the tools change. CRAR is not available once the lease has ended, so the arrears become an ordinary debt to be pursued through the courts or, if a judgment is obtained, through High Court enforcement. If the money matters more than the premises, CRAR first is usually the better order, because it does not end the lease.

Forfeiture of a Commercial Lease Explained

The short answer

If a commercial lease reserves a right of re-entry, and the tenant is in breach, the landlord can end the lease by re-entering the premises. Where the premises are wholly commercial that can be done without a court order, by peaceable re-entry: the locks are changed and a notice is posted, usually before trade begins. The lease is at an end from that moment.

Three things make it go wrong. Forfeiting when the right has been waived. Re-entering premises that include a home. And forfeiting for a breach other than rent without first serving the notice the Law of Property Act 1925 requires. Each is avoidable, and each is checked before we attend.

What forfeiture actually is

A lease is a contract and an interest in land. Forfeiture ends both. It is not a remedy the general law gives a landlord automatically; it exists only because the lease says so, in a clause usually headed re-entry or forfeiture, which allows the landlord to re-enter if rent is unpaid for a stated period, or if the tenant breaks another covenant, or becomes insolvent.

So the first question is always the same: what does the clause say? Most reserve the right once rent is a set number of days overdue, commonly fourteen or twenty one, and most dispense with the old requirement for a formal demand by including the words whether formally demanded or not. If the lease does not say that, a formal demand for the exact sum, made at the premises before sunset on the day it falls due, is still technically required. We read the clause before anything else.

When forfeiture is available

For non-payment of rent, the landlord can proceed once the period in the clause has run. No statutory notice is required first. This is the commonest case and the one peaceable re-entry was made for.

For any other breach, such as unauthorised alterations, subletting or disrepair, section 146 of the Law of Property Act 1925 requires the landlord to serve a notice first. The notice must identify the breach, require it to be remedied if it can be, and ask for compensation if the landlord wants it. The tenant must then be given a reasonable time to comply. Only after that can the landlord forfeit. A re-entry made without a valid section 146 notice is unlawful.

Where the tenant is insolvent, the position depends on the procedure. A tenant in administration, or protected by a moratorium, cannot be forfeited against without the consent of the administrator or the permission of the court. A tenant in liquidation can usually be, but the liquidator may seek relief. This is worth checking on the day, because insolvency can be entered overnight.

Peaceable re-entry or court proceedings?

There are two ways to forfeit. The landlord can issue possession proceedings and have the court order the tenant out, or the landlord can physically re-enter. The court route is slower and costs more but is unavoidable in two situations, and preferable in a third.

✓Any part of the premises is a dwelling. Section 2 of the Protection from Eviction Act 1977 makes it unlawful to enforce a right of re-entry other than by court proceedings while anyone is lawfully residing there. A shop with a flat above, let together, cannot be forfeited by changing the locks.
✓Someone inside is opposing entry. Section 6 of the Criminal Law Act 1977 makes it an offence to use or threaten violence to enter premises where a person present objects. That is why peaceable re-entry is done out of hours, when the premises are empty, and why our agents withdraw rather than force a confrontation.
✓The breach is disputed. If the tenant has an arguable case that the rent is not due, or that the section 146 notice was defective, a re-entry that later proves unlawful exposes the landlord to a damages claim. In those cases the court route removes the risk.

Outside those situations, peaceable re-entry is faster, cheaper and final. The premises are back in the landlord's control the same day.

Waiver: the way most forfeitures are lost

Once the landlord knows of a breach, any act which treats the lease as continuing waives the right to forfeit for that breach. The landlord's intention is irrelevant. What matters is the act.

The clearest example is rent. Demanding it, accepting it, or even banking a payment sent unprompted, will usually waive the right. A rent demand generated automatically by a managing agent's software has been enough. So has a covering letter reserving the landlord's rights: the reservation does not save a demand that is inconsistent with it.

The second example matters particularly to readers of this site. Exercising CRAR waives the right to forfeit. The Court of Appeal confirmed in Brar v Thirunavukkrasu (2019) that Commercial Rent Arrears Recovery is a remedy that presupposes a continuing lease, so serving a Notice of Enforcement for the arrears is an unequivocal affirmation of the tenancy. You cannot take the rent through CRAR and then forfeit for the same arrears. The order of operations has to be decided at the start.

Waiver applies to the breach the landlord knew about. A fresh breach, such as the next quarter's rent falling due unpaid, gives rise to a fresh right.

What happens on the day

Before attending. We check the lease for the re-entry clause and any conditions, confirm the arrears schedule, confirm nothing has been demanded or accepted since the breach, and confirm the premises are not residential and the tenant is not in administration.
Attendance. Two certificated enforcement agents and a locksmith attend, normally early in the morning before the premises open. If anyone is inside and objects, the agents withdraw. Otherwise the locks are changed.
Notice of forfeiture. A notice is fixed to the entrance stating that the lease has been forfeited by peaceable re-entry, the date and time, and where the tenant can make contact. The lease ends at that moment.
Inventory. The contents are photographed and listed. The landlord holds the tenant's goods as an involuntary bailee and cannot dispose of them without following the proper procedure.
Handover. Keys and a written report, with the inventory and photographs, are provided to the landlord or agent the same day. Where the premises are to stand empty, security can be arranged in the same visit.

Relief from forfeiture

Forfeiture is not necessarily the end. The tenant, and anyone with an interest derived from the lease such as a subtenant or a lender with a charge over it, can apply to the court for relief. If relief is granted the lease is treated as never having ended.

For non-payment of rent, where the landlord has re-entered without proceedings, section 139(2) of the County Courts Act 1984 allows the tenant to apply within six months of the re-entry. The court will normally grant relief if the tenant pays the arrears and the landlord's costs, because the purpose of forfeiture for rent is to secure payment, not to punish. The High Court has a parallel equitable jurisdiction which is not subject to a fixed time limit but is exercised on the same principles.

For other breaches, section 146(2) of the Law of Property Act 1925 gives the court a wide discretion, taking account of the seriousness of the breach, whether it has been remedied, and the conduct of both parties.

The practical consequence for a landlord is caution over re-letting. Granting a new lease to a third party within the relief period does not prevent relief being sought, and can leave the landlord with two tenants for one unit. We advise waiting for the tenant's position to be clear, or obtaining written confirmation that relief will not be pursued.

The tenant's goods

Whatever is left inside belongs to the tenant, or to a third party such as a leasing company. The landlord must take reasonable care of it and must not sell or dispose of it without notice. The usual course is to write to the tenant with the inventory, give a reasonable period to collect, and if the goods are not collected, serve notice under the Torts (Interference with Goods) Act 1977 stating that they will be sold or disposed of after a stated date. Any sale proceeds, after costs, belong to the tenant. Where goods are subject to hire purchase or lease, the finance company should be contacted.

After forfeiture

Three things change when the lease ends. Liability for business rates on the empty unit passes to the landlord, subject to the empty property exemption. The insurer should be told the premises are unoccupied, because most policies require it. And the arrears do not disappear, but the route to recovering them does: CRAR is no longer available, so what remains is a debt claim through the courts, followed if necessary by High Court enforcement of the judgment.

Forfeiture or CRAR?

These are alternatives, and choosing between them is the most important decision in the process.

Choose forfeiture when the premises are worth more to you than the arrears: the tenant is failing, the unit can be re-let, or a better covenant is waiting. It ends the relationship and returns the asset.

Choose CRAR when you want the money and would rather keep the tenant. It recovers the arrears with the lease intact, and in most cases the tenant pays on receipt of the notice. It does, however, waive the right to forfeit for those arrears, so it is a commitment to the tenancy continuing.

Neither route excludes the other for the future. A landlord who recovers this quarter's rent through CRAR can still forfeit if next quarter's rent goes unpaid.

Common mistakes

✓Re-entering after a rent demand has gone out, and finding the right was waived.
✓Forfeiting for disrepair or alterations without a section 146 notice.
✓Changing the locks on a unit with a flat above it.
✓Serving a CRAR notice first, then trying to forfeit for the same arrears.
✓Disposing of the tenant's goods without notice.
✓Re-letting inside the relief period.

What it costs

Unlike CRAR, forfeiture has no statutory fee scale. We quote in writing before you instruct, based on the premises, the location and whether security or an inventory is needed on the day. Our forfeiture service page explains how to instruct us, and the Authority to Effect Forfeiture can be completed online.

This guide explains the general position in England and Wales. It is not legal advice, and it is not a substitute for taking advice on a specific lease. If you would like us to look at a particular lease and set of arrears, send us the details and we will tell you plainly whether forfeiture is available and whether it is the right route.

Forfeiture of a commercial lease, explained.