Owning a commercial property can be a good long-term investment. However, problem tenants who don’t pay their rent on time can cause substantial amounts of stress. It might be that you need to forfeit a commercial lease for non-payment of rent.
Can I terminate a commercial lease early?
There are cases where a commercial landlord can forfeit a lease early. This is usually due to the non-payment of rent and is a quick and easy process.
There is usually the contractual right to re-enter the property and terminate the lease contained within most standard leases. However, it’s important to check in advance that there is such a clause. The lease will also state how late the rent must be before a forfeiture can be carried out. Typically, this is between 14 and 28 days.
Unlike Commercial Rent Arrears Recovery (CRAR), carrying out a lease forfeit won’t result in the overdue rent being paid. However, it does enable the landlord to re-let the premises and prevents the tenant from getting further in arrears.
Lease forfeit v rent arrears recovery
Where a commercial tenant is already in substantial rent arrears, a landlord might want to consider trying to recover the debt first. Rather than forfeiting a commercial lease, there is the option of doing a CRAR.
This could be the best solution when the financial problems are expected to be short term and the landlord wants the tenant to remain in the property. Through a CRAR the tenant could pay off the arrears in one lump sum or arrange a payment plan with the bailiff.
It is possible to try for the rent arrears first and then go through with a lease forfeit if it’s unsuccessful. However, it’s important that you follow the correct procedure. Where you’ve already demanded the rent arrears through a CRAR you’ll need to wait until the next rent is overdue. Otherwise, the tenant could have the right to re-occupy the premises, as you are seen as waiving your right to forfeit by formally demanding the rent.
How do I forfeit a commercial lease?
A commercial lease forfeit can be carried out without giving the tenant any notice where it’s for non-payment of rent. For other breaches, notice must be given that the landlord wishes to forfeit the lease.
Once the rent is outstanding by the period stated in the lease, the landlord (or their representative) can re-enter the property and change the locks. This prevents the tenant from gaining access and ends the current lease agreement.
At The Bailiff Company, we can carry out a commercial lease forfeit on behalf of landlords. Our bailiffs will organise a locksmith to attend at the site with them and display all the relevant notices. This is generally conducted outside of business hours, in order to carry out a peaceful possession of the property.
Whether you have one commercial property or a portfolio of sites, contact our team to discuss your lease forfeit requirements. In most cases, we are able to act the following day, enabling you to take back possession of your property quickly.