Common breaches of leases in commercial property and their legal implications:

When a commercial tenant breaches their lease, their landlord has a decision to make on whether they want to consider their tenant has forfeited the lease or they simply require the breach put right and remain at the property. This will vary depending on the circumstances of the landlord and the tenant, their relationship up to this point, and the economic climate.

Forfeiture is the legal process whereby a landlord re-enters their property and takes possession back from the tenant. This brings the lease to an end. 

The commercial property lease should specify the conditions under which the landlord can forfeit the lease. There are several restrictions on the landlord’s right to forfeit, so it is crucial to seek legal advice before taking any action with regard to this. If the forfeiture is handled incorrectly and deemed unlawful, the landlord could be liable for significant damages claimed by the tenant. 

For all breaches of the lease (with the exception of non-payment of rent) the first thing a landlord must do is serve a Section 146 Notice on their tenant. This notice informs the tenant of the alleged breaches of the lease and indicates what they must do to remedy them.  

If a tenant fails to comply with the with the Section 146 Notice, they put themselves at risk of having their lease forfeited.  

Waiving a breach can occur unintentionally if a landlord takes any action that suggest they accept the lease’s continuation despite the breach. For instance, continuing to demand or collect rent after a breach has occurred could imply acceptance. It is advisable to cease demanding or collecting rent immediately upon identifying any breach that might lead to forfeiture. 

Most commercial leases contain a covenant that requires the tenant to keep the premises in good repair. They often also contain a clause that allows the landlord to enter the property and carry out the repairs themselves if the tenant fails to do so. Should the landlord be required to do this, they can often recover the costs of the works from the tenant.  

This situation arises when a tenant breaches the lease in a way that causes the landlord to incur a loss. For example, if the tenant’s breach diminishes the property’s value or causes another tenant to vacate the building, the landlord would have the right to commence a claim seeking damages as well as costs from the tenant.

If there is an ongoing breach of the lease, such as unauthorised use of the premises, a landlord may have the option to apply to the court for an injunction to stop the breach. 

Our commercial property lawyers are on hand to offer expert advice. Our solicitors have extensive experience with correctly renewing or ending commercial leases, correctly drafting and serving notices, complying with deadlines, issuing court proceedings and the tactical considerations for either party once court proceedings have been issued. 

We will provide clear guidance at each step of the process. Contact us now for any advice you need by calling +44 (0) 207 228 0017 or via the form below.