Forfeiture of a lease when there has been a breach

A failure to comply with a lease covenant could be: a failure to pay service charge, ground rent, unauthorised alterations, unreasonable noise nuisance, allowing damage / waste to property, illegal subletting, unlawful Airbnb, change of user, failure to provide access and even possibly any act that causes the insurance policy for the building to become invalid.

If you want to forfeit a lease you must serve a “Section 146 notice” (from the Law of Property Act 1925), which must include information about the breach of the lease. There is not an automatic right to apply for an order authorising forfeiture, as the lessee must be given a reasonable opportunity to remedy the breach.

For a “Section 146 notice” to be valid, either the lessee must admit the breach of covenant, or a First-tier Tribunal (Property Chamber), or a court must determine that the lessee is in breach.

As a tactical measure (that could save a lot of time and cost) the County Court does have jurisdiction under s.15 County Courts Act 1984 to make a declaration that a lessee is in breach of covenant. This declaration is effective for the purposes of s.168 Commonhold and Leasehold Reform Act 2002. Further the court can make the normal order for costs notwithstanding that the LVT has concurrent jurisdiction. This is of course a preferable route because a Freeholder can obtain an order for its costs and possibly proceed more quickly.

If the breach is not remedied, the Freeholder may apply to court for an order for possession.

The leaseholder can apply for “relief from forfeiture”, which will restore their lease. This will usually only come into effect if the Leaseholder promptly remedies any breaches and pays the Freeholder’s legal costs. However, if the leaseholder does not cooperate then invariably a Court must order the ultimate sanction to forfeit the lease and grant an order for possession.

I cannot stress enough how important it is that you chose solicitors with experience of dealing with forfeiture cases. In doing so you will save time, obtain costs orders as you proceed and avoid unnecessary / potentially unrecoverable costs

Call us today for assistance on 0203 219 0145 or email arman@oliverfisher.co.uk.

By Arman Khosravi, Partner, 30th July 2019.

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