Commercial Property: Tenant’s Breach of Lease – Part 2

Once a landlord has discovered that his tenant is in breach of a term in the lease, he may decide to serve the tenant with a Section 146 Notice before proceeding to forfeiture. Before serving such notice a landlord must ensure he has not waived his right to forfeit the lease.

Waiver will depend on whether the breach is a “one and for all” or “continuing” breach and whether or not the breach is capable of remedy. If a once and for all breach is waived, the landlord can never forfeit for that particular breach. If, however. A continuing breach is waived, the option to forfeit will reoccur, usually on a day to day basis. Examples of once and for all breaches are unauthorised assignment, sub-letting or alterations or the failure to put the premises in repair by a specified date. Examples of continuing breaches are unlawful sharing or occupation, unauthorised use or failure to keep premises in repair or insured.

Common examples of waiver include the acceptance of rent, entering into negotiations with the tenant and carrying out and inspection of the premises in accordance with the lease.

Hollie Wright, Solicitor in the Commercial Litigation Team at Mullis & Peake LLP, said:

“One of the most common questions asked by landlord’s is whether or not they can continue to accept rent after they become aware of a tenant’s breach. Acceptance of rent is often seen as a clear sign of waiver but it will depend on the nature of the breach.

Where the tenant has committed a continuing breach which is capable of remedy, the acceptance of rent during the notice period will not amount to waiver. Until such time as the notice has expired, the right to forfeit has not arisen.

Where the tenant has committed a breach which is not capable of remedy e.g. failing to put premises in repair by a certain date, the acceptance of rent will amount to waiver. The right to forfeit accrued at the date of service of the notice.

It is therefore very important that landlord’s understand the nature of the breach and ensure they do not prejudice their position by committing an act of waiver inadvertently.”

Should you have any Commercial Landlord & Tenant issues and require legal advice, please contact Hollie Wright on 01708 784022.