Whether you are a Freeholder or a Lessee dealing with a breach of covenant contained in a lease or forfeiture of the lease, we can assist you in proceedings.
Most importantly, there must be clauses in the lease allowing a landlord to take action following breaches of covenants. There are significant consequences for Freeholders who attempt to take actions not covered by the terms of the lease.
If a Lessee takes actions which are specifically not authorised in the lease, such as subletting without permission, or carrying out unauthorised alterations, then this is a breach of covenant.
Failure to pay service charge or ground rent is also a breach of covenant.
A Freeholder’s options in this situation are to either commence forfeiting the lease, or to continue the lease but go to court to claim damages to account for rent arrears or compel the tenant to comply with the lease.
You can only exercise the right to forfeit if the terms of the lease specifically allow you to do this.
If you attempt to remove a lessee from the property and the lease does not allow for forfeiture, you may be prosecuted for committing a criminal offence.
If ground rent or service charge is in arrears, you must write to the tenant and state the amount of owing, the period it has been unpaid, your name as a Freeholder and how the amount can be paid. You must ensure that e a valid service charge demand has been served.
If you want to forfeit the lease for any other reason, you must serve a “Section 146 notice” (from the Law of Property Act 1925), which includes information about the breach of the lease. There is not an automatic right to apply for an order authorising forfeiture, as the tenant must be given an 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, a post-dispute arbitration agreement must determine that the lessee is in breach.
If the breach is not remedied, the Freeholder may apply to the court for an order for possession.
The tenant can apply for “relief from forfeiture”, which will restore their lease. This will usually come into effect if the tenant promptly remedies any breaches and pays the Freeholder’s legal costs.
At Oliver Fisher we can advise you on the steps to take if your tenants breach covenants, and if you wish to forfeit the lease. Our expertise means we can instruct you on the correct steps to be taken, and actions to avoid.
To discuss the legalities surrounding breach of covenants and forfeiture further, please email Arman Khosravi at arman@oliverfisher.co.uk or call us on 0203 219 0145.
