Forfeiture - Non-Rent

Since 28 February 2005, the rules relating to forfeiture were tightened as Section 168 of the Commonhold and Leasehold Reform Act 2002 came into force.  This provision applies to forfeiture for non-rent reasons.

This provision came into force as a result of landlord’s issuing Section 146 Notices pursuant to the Law of Property Act 1925 to tenants for minor breaches of a lease where the landlord had no intention forfeiting the lease.  The rationale behind service of these notices was to induce the naïve tenant into paying a lump sum and costs to the landlord in settlement of the alleged breaches.

Under the new provisions, if the tenant does not admit any breaches of the lease then the landlord will have to refer the matter to either the Land Valuation Tribunal or to Court for a determination on this point.  Following a successful determination of this point and the expiration of fourteen days, the landlord may then serve a Section 146 Notice on the tenant.  If the tenant fails to remedy the breach or the landlord does not accept that the breach has been remedied then the landlord may issue proceedings for forfeiture.

Once proceedings are issued, the tenant will have the option to apply for relief from forfeiture.  If the tenant decides to apply for relief from forfeiture then the Court will determine whether the forfeiture is valid.  If it is not, then the Court will dismiss the claim.  If it is, then the Court will declare that the forfeiture is valid and may Order the tenant to pay the landlord’s costs.

If the tenant does not apply for relief from forfeiture, then the Court will decide whether the tenant has a defence (other than the non-occurrence of breach) and following this determine whether the forfeiture is valid or not.

Article First Published: 16 April 2005

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