Relief from Forfeiture Granted After 14 Months
Landlords to a commercial property have available to them the popular "self help" remedy of peaceable re-entry when faced with a tenant who is in arrears with their rent. This is where the landlord physically re-takes possession of the property. It is important to remember, however, that this course of action is only available where the lease expressly grants the right of re-entry if the rent remains unpaid for a specified period, .
The recovery of possession of a property by peaceable re-entry is not a step to be taken lightly and there are restrictions on when and how it should be done. Whilst not discussed here, Rollits' Property Dispute Resolution Team are happy to advise on the potential pitfalls and how to avoid them.
Even if peaceable re-entry is carried out properly, however, and the lease forfeited, a tenant is entitled to apply to the Court for relief from forfeiture. If successful, the lease will be reinstated, effectively turning back the clock so that it is as if the forfeiture did not happen. The question of how long a tenant has to make a claim for relief from forfeiture is not a straightforward one and has in fact become even more unclear following the recent case of Pineport Ltd v Grangeglen Ltd.
In this case, the Court granted relief from forfeiture even though the tenant did not make its application for 14 months following the landlord re-taking possession of the property. This was a surprising decision in light of the comments of the Court in previous cases which suggested that any claim for relief should be made "with reasonable promptitude". The Court in Pineport, however, stated that the speed at which the claim was made was only one of the factors to consider. Other factors that the Court considered needed to be considered in this case included
- The tenants mental health/depression and his ability to seek proper advice
- Efforts being made to sell other assets in order to pay the outstanding arrears (the tenant's brother was selling his property to assist with matters in this case)
- The value of the lease compared to the outstanding arrears
- The level of prejudice suffered by the landlord in the non-payment of rent and the delay in any claim for relief
- Any steps taken to re-market the property or secure a new long term lease
This decision may make landlords hesitant in exercising their right of peaceable re-entry as it is not clear the length of time that will need to pass before the tenant can safely assume that any claim for relief will fail. Some steps which a landlord may consider to protect their position however may be as follows:
- Wherever possible to seek an undertaking from an outgoing tenant that they will not make a claim for relief (although this isn't always possible)
- Consider the level of arrears against any windfall you would get if relief were refused (the greater the difference the more likely it is that relief will be granted).
- Investigate the possibility of recovering possession of the property by way of Court proceedings if certainty of possession is a high priority.
Any contested claim for relief could potentially be just as costly and time consuming as the Court proceedings which could have originally been taken to recover a property in the first place. Landlords need to think carefully about the route that they embark upon to recover their property, taking account of all the relevant factors of their particular case .
If you have any queries arising from this article, would like to suggest a topic for a future article or wish to discuss a contentious property issue, contact Chris Drinkall, Head of Rollits' Property Dispute Resolution Team on 01482 337367 or email@example.com
Posted on: 12/09/2016
This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.
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