Advising a client on s146 notice Flashcards
What is a s146 notice?
This is a notice given by a landlord to a tenant requiring them to remedy a breach of covenant of the lease.
A s146 notice must be served on a tenant for a breach of tenant obligations (other than non-payment of rent), before a landlord can exercise any right to forfeiture provided by the lease.
- The notice details the alleged breach and provides the tenant with reasonable opportunity to remedy it
- If the tenant fails to remedy the breach, the landlord can forfeit
- If the breach is capable of being remedied, the landlord needs to give the tenant reasonable time to remedy before forfeiting
When is a s146 notice used?
- Right of forfeiture in the lease - there must be an express provision in the lease for the landlord to be entitled to forfeit
Non-payment of rent arrears
- Landlord is entitled to forfeit as soon as lease allows
- Does NOT need to serve a s146 notice
Any other breach of tenant obligations
- Landlord must serve a s146 notice
- This must detail the breach and give tenant reasonable opportunity to remedy it
What additional safeguards are in place for a tenant in breach of repair obligation?
A tenant in breach of a repair obligation has 28 days to serve a counter notice
This applies to leases of a term of more than 7 years with 3 years left to run
- When advising a client on this, need to check the lease term (more than 7 years) and when the lease started (must have 3 years left to run)
Objectives of a solicitor acting for a client who has been served with s146 notice
- Ensure client understands basis of notice - check their understanding
- Confirm the landlord is entitled to forfeit the lease - check express provision in the lease
- Advise on options to remedy, negotiate or challenge the notice
- Is the breach capable of remedy? Does the client want to remedy it or challenge the notice?
- What is the breach? Continuing / non-continuing? Repair (additional safeguards) - Relief from forfeiture application
- What actions has the landlord taken since serving notice?
- Has the landlord acted in a way which has waived their right of forfeiture?
Key questions to ask a client?
- The lease
- When was it entered into, and what is the term length?
- Do you have a copy of it? (If not, ask them to provide one) - Questions about the alleged breach
- What has the tenant done to the property?
- Did the tenant obtain landlord’s consent?
- Has the tenant received prior complaints? - Rent
- Are there any arrears of rent?
- Has the tenant received any prior demands or notices before the s146 notice? - Service of the notice?
- When was the s146 notice received?
- Check it has been served correctly in accordance with the lease
- Does the notice specify the breach clearly and give reasonable opportunity to remedy it? - Previous dealings?
- Any recent disputes with the landlord?
- Can you describe the relationship with your landlord? Does the client want to stay in the property and preserve the tenancy?
- Have there been any prior communications regarding this alleged breach? - Other relevant information?
- What have you done so far to try and rectify the alleged breaches?
- Are there any subtenants or licencees at the property?
Strategic advice
- Can the tenant apply for relief and on what grounds?
- Is it better to settle, challenge the notice or remedy the breach? Find out which is most appropriate for the client
Asking the client whether the landlord has waived the right to forfeiture?
Q: since you received notice from your landlord, have they done anything that suggests they still consider the lease to be ongoing.
Clarify: for example, have they asked you for rent? Have they accepted rent payments from you? Have they communicated with you as if you’re still the tenant?
- Have you made any rent payments since the notice and did the landlord accept them?
- Has the landlord sent any letters, invoices or communication that suggests you are still a tenant in the property?
Context: the reason I need to ask these questions is because the landlord may have taken steps which actual ‘waive’ their right to forfeit, which would mean they are no longer entitled to exercise their right of forfeiture
Next steps following receipt of s146 notice
Solicitor:
- Review the lease and notice (if not already done)
- Investigate alleged breaches
- Assess landlord’s conduct post-notice (is there anything to indicate they have waived the right to forfeiture)
- Advise on remedying the breach (in light of client’s instructions and wishes)
- Initiate communication with landlord (if client instructs - need to send them letter for approval first)
- Consider relief from forfeiture
Client:
- Provide key documents
- Stop and avoid further breaches (advise client to not continue acting in breach)
- If the breach can be remedied, take steps to remedy and retain proof
- Keep records of communication with the landlord
Key practical advice to give to a client
Must advise them to STOP acting in breach
- Stop and avoid further breaches
- E.g., keep premises in good repair
Keep records of communication with landlord
- Do not ignore the notice - there are strict deadlines we must comply with and consequences if the landlord proceeds to forfeit
Reassure client of solicitor’s role in this
Solicitor’s role is to protect the tenant’s position, challenge or resolve the alleged breach and prevent the loss of the lease
What must a s146 notice contain?
It must
- specify the breach
- require the tenant to remedy the breach (if it is capable of remedy) within a reasonable time
- require the tenant to pay compensation for the breach
Forfeiture and s146 notice requirement
The right to forfeit (if available under the lease) is not enforceable unless a s146 notice is served on the tenant
Explain the additional requirements for breach of repair obligation: ‘special s146 notice’
If there is a breach of a repair covenant and the lease satisfies the requirements of Leasehold Property (Repairs) Act 1938:
- i.e., granted for a term of not less than 7 years, with at least 3 years left to run
The s146 notice served for forfeiture must also contain a statement informing the tenant of their right to serve a counter-notice within 28 days
- This means the landlord requires the leave of the court before proceeding with the forfeiture
