How to Evict a Commercial Property Tenant
Posted on 5th March 2020 at 13:51
As a landlord of a Commercial Property there are several motives why you may wish to repossess your property. The most common reason being that your tenant is in breach of the terms of their lease for say not paying rent, or not keeping the property in a good state of repair, or causing a nuisance to your neighbours or because the Tenant has assigned or sublet your property without getting your consent first.
1. How to Claim possession of your commercial property
Claiming back possession of your property when it is occupied by a tenant is referred to as 'forfeiture'. You are only entitled to forfeit the lease if there is a forfeiture clause in the lease entitling you to do so. It is sensible for all commercial property leases to have such a clause because if you don’t have one you restrict your options on being able to evict a tenant.
Forfeiture can be used in one of two ways:
a. Peaceable re-entry - is where you enter the property and change the locks. This strategy is considered to be far more risky as your tenant does have the right to apply to court for relief from forfeiture. If the tenant successfully takes back possession of the property, they can also claim damages for losses incurred as a result of your wrongful eviction;
b. Applying to court for possession - This is the safer and is the preferred option for some Landlords. However, it can be very costly and can take some time to get possession back.
Deciding which route to take really depends on your reason for repossession.
1. Non-payment of rent
If your tenant fails to pay their rent, you do not need to give any notice of your intention to forfeit; you can simply re-enter the property if you have a forfeit clause in the lease.
You should not acknowledge the continuance of the tenancy, such as remind the tenant that the rent is overdue otherwise this might be seen as you waivering your right to forfeiture which means that you will have to wait until the next rent payment is missed.
It is sensible to leave a notice of repossession on the door of the property and make sure you have a witness with you who can confirm the notice being put in place. Taking photos of the notice in place is also a good idea.
2. Breach of other lease terms
For all other breaches, you first have to serve a section 146 notice before you can take possession of the property. The notice must be served by your solicitor on all interested parties, including the tenant, any lender and any undertenant in place. The notice must highlight the nature of the breach and whether you require it to be rectified within a reasonable time or the payment of compensation. If the breach has not been rectified or the compensation paid as required then you can proceed to forfeit the lease.
3. Breach of the repair condition
There are other regulations that apply for notices relating to breaches of repair. In some cases you may need to offer the tenant the opportunity to claim statutory protection. If the tenant claims this protection, which they must do within 28 days of receiving your section 146 notice, the landlord must make a preliminary claim for the court's permission before taking any further action.
This can be avoided if the lease contains a clause which entitles the landlord to enter the premises to remedy any defect of repair and claim any costs incurred back from the tenant as a debt.
The court procedure for forfeiture starts by making an application for possession in the county court. There are standard claim forms that must be completed, which can now be submitted online in some courts. The claim forms must then be served on the tenant, within a strict time-frame.
Tenants' relief from forfeiture
Your tenant can apply to court for relief from forfeiture if certain conditions are met. The tenant does not have an automatic right but the Court has a discretionary to offer this remedy. However, if granted they may be able to continue to occupy the property under their existing lease.
The tenant should make an application as soon as they receive a section 146 notice because they will be penalised if they are found to have delayed unnecessarily.
Forfeiture is not to be taken lightly as it can be a lengthy process. You should consider alternatives first and whether there would be any impact on undertenancies, assignees and lenders.
To speak to one of the commercial property team or for more information on how our commercial property team can help you, please call us on 0113 2007480 or fill in our contact form and one of the team will call you back.
Tagged as: Commercial Litigation, Commercial Property
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