Disputes between commercial landlords and tenants are increasingly common and are usually associated with failure to pay rent or other breaches of covenant. Most rent disputes about amount go to arbitration, but where there is no provision for arbitration or where the Landlord and Tenant (Amendment) Act 1980 comes into play, they end up in court. This is to the disadvantage of all parties as it adds unnecessary expense and spoils the important landlord and tenant relationship.
A lot of tenants, however, fail to realise that a landlord can normally avail of the forfeiture clause contained in most commercial leases to forfeit their lease, particularly in instances of non-payment of rent, and re-possess the premises if the rent goes unpaid for the period set out in the forfeiture clause – usually two weeks or thereabouts without the need for any court application or order.
Depending on how it is drafted, the forfeiture clause normally allows a landlord who is owed rent to demand his rent payment and if it is not paid within two weeks, to legally re-enter the premises if he has not been paid by then. If necessary, the landlord can even re-possess the property and change the locks if he can do this peaceably.
A tenant can apply himself to court to stop the landlord’s action, but he will usually have to bring his arrears of rent up to date if he wants to have any chance of succeeding in this application.
Most landlords are willing to come to an arrangement with tenants; however, some larger or institutional landlords prefer to take the forfeiture route because of its speed and low cost and particularly where there has been an ongoing saga of rent issues with the tenant. A property for which rent is not being paid is not a performing asset and a tenant who is in arrears is often going to continue to struggle, so this is a commercial decision for landlords.
So a warning to all tenants: If rent arrears are allowed build up too much, be wary of the forfeiture clause in your lease, as the landlord can seek to bypass the court and serve you with a 14 day notice to re-possess the premises in the event he is not paid his arrears and the lease provides for it.
Any tenant who receives such a notice would be well advised to consult a solicitor promptly either to broker a settlement with the landlord or to take appropriate legal action to safeguard its position.
If you have any queries regarding commercial leases please contact us by phone at 061 501100, email Thomas Dowling, litigation partner at [email protected] or get a call back by completing our contact form so we can provide you with further information or advice.