RE15
Landlord’s Remedies and Lease Termination
Landlord’s remedies for breach of lease
A landlord has a number of REMEDIES available when a TENANT BREACHES a covenant contained in the lease.
The available remedies vary depending on whether the breach is of a covenant to pay rent, or a breach of
another covenant in the lease e.g. a repairing covenant.
Exam Structure:
1. Clause they have breached in the lease – rent (clause 4.1 – work out when last paid, when not paid when
due/how long) and repair (clause 4.8 - wear and tear is not insured risk, therefore tenant has the obligation)
2. Identify the option.
3. Briefly explain what it is.
4. Discuss a pro and a con for each.
5. Conclude at the end as to which one is more appropriate. There usually is not a wrong answer, just
whatever answer you give must be justified – can try for as many as possible
Non-payment of rent
Option Procedure Pros and Cons
Debt Action The landlord can bring a claim Pros:
against the tenant to recover a
debt. Get to keep the tenant (though this may not be desirable if he
isn’t paying rent on time) – no vacant possession
Apply to the court.
Not
Relatively secure as tenant is unlikely to have a strong counter-
appropriate Action must be initiated
within 6 years (limitation argument.
for breaches
period)
of other
Can be relatively quick through the County Court.
covenants as
Request will be for a
not a specific sum and interest Cons:
specified sum if provided for in the lease
known (always check this) Costly (especially if tenant has no money).
Can become protracted and hence time-consuming.
Ineffective if the company is insolvent. No point suing current T
who is likely to be in financial difficulties (financial difficulty is
probably why they defaulted on rent payments in the first
place)
If the tenant has no money then a successful debt action will be
a waste of time and the landlord will have thrown “good money
after bad”.
Limitation Act 1980 means action can be brought with regards
only debts which were due in the last six years.
1
, RE15
May have to enforce the judgment which can be time-
consuming.
Forfeiture/ Forfeiture clause must be Pros:
Re-entry specified in the lease.
Can get rid of a difficult tenant – vacant possession
i.e. early Will need to serve a formal
termination of demand for payment on the Chance to get new T and potentially higher rent depending on
the lease. tenant unless the forfeiture market conditions
clause dispenses with this.
Remedy is powerful and a formal demand might pressure the
If the tenant does not pay, the tenant into action.
landlord can then forfeit the
lease by either (1) peaceable Cons:
re-entry or (2) court order.
Disadvantage of losing your current tenant, meaning the
NO NEED TO SERVE NOTICE ON premises will be vacant and will need to be marketed.
T MUST DO FOR
FORFEITURE OF OTHER The landlord will not recover any money if the lease is
BREACHES successfully forfeited.
Tenant is entitled to claim relief against forfeiture which the
court may grant on any terms it sees fit.
Court action may take time and be costly.
The landlord may be deemed to have waived his right to
forfeit by any act demonstrating an intention to continue the
relationship of landlord and tenant.
Commercial The landlord may enter the Pros:
Rent Arrears premises and remove and sell
Recovery the tenant’s goods if: Powerful threat as drastic consequences for T
You get your money back whilst getting to keep the tenant,
Procedure
o The entire premises is a however the tenant is unlikely to be happy as he will have had
(CRAR) his assets removed.
commercial premises.
(s81 Cons: (unlikely to be best option, lots of cons)
o Rent (‘pure’, not for
Tribunals,
service charge/insurance
Courts and Certain goods are exempt and cannot be seized – up to £1350
etc) has been outstanding
Enforcement of assets which are necessary for the tenant’s business (this is
for at least 7 days.
Act 2007) the amount they have to LEAVE behind).
o The landlord must then
give the tenant 7 clear days Risk that tenant will try to hide assets once he gets notice of
(i.e. not including Sundays the CRAR, although the landlord can make an application to
& Bank Holidays) notice of reduce the notice period if this is likely under Part 2 of the
his intention to enter. Taking Control of Goods Regulations 2013.
o Enforcement agents will To be effective the business must have a lot of stock and
then enter and seize machinery over and above the excluded items to satisfy the
goods. debt – most businesses rent equipment etc
2
Landlord’s Remedies and Lease Termination
Landlord’s remedies for breach of lease
A landlord has a number of REMEDIES available when a TENANT BREACHES a covenant contained in the lease.
The available remedies vary depending on whether the breach is of a covenant to pay rent, or a breach of
another covenant in the lease e.g. a repairing covenant.
Exam Structure:
1. Clause they have breached in the lease – rent (clause 4.1 – work out when last paid, when not paid when
due/how long) and repair (clause 4.8 - wear and tear is not insured risk, therefore tenant has the obligation)
2. Identify the option.
3. Briefly explain what it is.
4. Discuss a pro and a con for each.
5. Conclude at the end as to which one is more appropriate. There usually is not a wrong answer, just
whatever answer you give must be justified – can try for as many as possible
Non-payment of rent
Option Procedure Pros and Cons
Debt Action The landlord can bring a claim Pros:
against the tenant to recover a
debt. Get to keep the tenant (though this may not be desirable if he
isn’t paying rent on time) – no vacant possession
Apply to the court.
Not
Relatively secure as tenant is unlikely to have a strong counter-
appropriate Action must be initiated
within 6 years (limitation argument.
for breaches
period)
of other
Can be relatively quick through the County Court.
covenants as
Request will be for a
not a specific sum and interest Cons:
specified sum if provided for in the lease
known (always check this) Costly (especially if tenant has no money).
Can become protracted and hence time-consuming.
Ineffective if the company is insolvent. No point suing current T
who is likely to be in financial difficulties (financial difficulty is
probably why they defaulted on rent payments in the first
place)
If the tenant has no money then a successful debt action will be
a waste of time and the landlord will have thrown “good money
after bad”.
Limitation Act 1980 means action can be brought with regards
only debts which were due in the last six years.
1
, RE15
May have to enforce the judgment which can be time-
consuming.
Forfeiture/ Forfeiture clause must be Pros:
Re-entry specified in the lease.
Can get rid of a difficult tenant – vacant possession
i.e. early Will need to serve a formal
termination of demand for payment on the Chance to get new T and potentially higher rent depending on
the lease. tenant unless the forfeiture market conditions
clause dispenses with this.
Remedy is powerful and a formal demand might pressure the
If the tenant does not pay, the tenant into action.
landlord can then forfeit the
lease by either (1) peaceable Cons:
re-entry or (2) court order.
Disadvantage of losing your current tenant, meaning the
NO NEED TO SERVE NOTICE ON premises will be vacant and will need to be marketed.
T MUST DO FOR
FORFEITURE OF OTHER The landlord will not recover any money if the lease is
BREACHES successfully forfeited.
Tenant is entitled to claim relief against forfeiture which the
court may grant on any terms it sees fit.
Court action may take time and be costly.
The landlord may be deemed to have waived his right to
forfeit by any act demonstrating an intention to continue the
relationship of landlord and tenant.
Commercial The landlord may enter the Pros:
Rent Arrears premises and remove and sell
Recovery the tenant’s goods if: Powerful threat as drastic consequences for T
You get your money back whilst getting to keep the tenant,
Procedure
o The entire premises is a however the tenant is unlikely to be happy as he will have had
(CRAR) his assets removed.
commercial premises.
(s81 Cons: (unlikely to be best option, lots of cons)
o Rent (‘pure’, not for
Tribunals,
service charge/insurance
Courts and Certain goods are exempt and cannot be seized – up to £1350
etc) has been outstanding
Enforcement of assets which are necessary for the tenant’s business (this is
for at least 7 days.
Act 2007) the amount they have to LEAVE behind).
o The landlord must then
give the tenant 7 clear days Risk that tenant will try to hide assets once he gets notice of
(i.e. not including Sundays the CRAR, although the landlord can make an application to
& Bank Holidays) notice of reduce the notice period if this is likely under Part 2 of the
his intention to enter. Taking Control of Goods Regulations 2013.
o Enforcement agents will To be effective the business must have a lot of stock and
then enter and seize machinery over and above the excluded items to satisfy the
goods. debt – most businesses rent equipment etc
2
