In a commercial setting, the obligations between a landlord and tenant are often set out in a formal written lease and so that each side know what is expected of them and when. Largely, the parties to a commercial lease comply with their agreed terms and the relationship rolls along quite happily. But, what happens when things go wrong and a tenant fails to perform its obligations under their lease?

This article will explore the different types of breaches that may occur and the remedies available to a landlord in the event that there is a breach of the lease.

Failure to make Payment

Should a tenant default on their rental payments or any other payments due under the terms of the lease, the Landlord has the following options:

1. The first option is to formally demand the outstanding sums in writing and, if they remain unpaid, to issue a money claim in the County Court.

2. The second option is to appoint an enforcement agent to engage the Commercial Rent Arrears Recovery process. This can, however, only be used in relation to rent arrears and cannot be used in respect of any other sums due under the lease (such as service charges or insurance payments), even if they are reserved as rents.

3. Depending on the value of the debt owed, a statutory demand may be an option and would be served as a precursor to insolvency proceedings in the event that payment was not forthcoming.

In each of the above cases, the action is taken in an attempt to recover the monies that are owed.

There is, however, an additional option that may be available depending on the terms of the lease; this is the process of forfeiture and will bring the lease to an end.

The lease will need to include specific provision for forfeiture for non-payment of rent to enable the landlord to bring the lease to an end on that basis. This is a serious step for a landlord to take and therefore specific legal advice on the circumstances of each individual case should be sought in advance. Forfeiture, however, will not directly assist with the recovery of the outstanding amounts and the landlord will need to pursue those separately.

Breaches of other Covenants

There are many other ways that a tenant may be in breach of their lease, including for example, by failing to comply with repair obligations or statutory requirements. Should informal discussion with the tenant not result in a rectification of the breach then the following options may be available to the landlord:

1. The landlord can serve a notice under section 146 of the Law of Property Act 1925. This will put the tenant on notice of their breaches and give them the opportunity to put it right. If they don’t then the landlord can issue forfeiture proceedings, again with a view to bringing the lease to an end.

2. If the breach relates to a maintenance issue for which the tenant is responsible then, depending on the terms of the lease, the landlord may be entitled to enter the property and have the works completed themselves. The terms of the clause will need to be correctly applied otherwise the landlord is at risk of breaching the lease too. Once the work has been completed, the landlord can then bring a claim against the tenant for the costs of this to be done.

3. Finally, in rare cases, the landlord may be entitled to bring a claim for specific performance of the lease or injunctive relief, however, this would be entirely fact sensitive and would need specialist advice.

In short, there many options available to a landlord in the event that a tenant is in breach of their obligations under a lease. The most appropriate route will often depend on the circumstances of the case and the terms of the individual lease and therefore it is important that the landlord takes care and seeks advice prior to pursuing their legal rights.

If you would like further advice in relation to breach of leasehold covenants, please contact Louise Palmer on 01543 267231 or by email at lpalmer@ansons.law.