Forfeiture Flashcards
What is forfeiture?
Landlord’s right to end lease early, before expiry, allowing landlord to retake possession of premises due to tenant default
Is the right to forfeit automatic?
No, must expressly be provided for in the lease
What are common grounds for forfeiture?
Non-payment of rent
Breach of lease obligations
Insolvency event
How can forfeiture be a powerful pressure tool?
Public re-entry can damage tenant’s business reputation
Why is a court order good / bad for forfeiture?
More secure legally, but more time-consuming and costly
What is a waiver of forfeiture?
Landlord loses right to forfeit if it acts in a way that acknowledges the lease continues, with knowledge of the breach
What is the test for waiver?
1) Unequivocal act recognising lease
2) Landlord had knowledge of breach
3) Act is communicated to tenant
Is landlord’s intention relevant for waiver of forfeiture?
No
What are the types of breach that have an effect on waiver?
1) Once-and-for-all breaches
2) Continuing breaches
What is the effect of once-and-for-all breaches on waiver?
Waiver is permanent
What is the effect of continuing breaches on waiver?
Right to forfeit renews daily
What are examples of once-and-for-all breaches?
1) Non-payment of rent
2) Unlawful assignment / underletting
3) Insolvency event
What are examples of continuing breaches?
1) Failing to keep in repair
2) Breach of user covenant
3) Failing to comply with insurance obligations
What is a section 146 notice?
A notice required for forfeiture for breaches other than non-payment of rent
What must be provided in a section 146 notice?
1) Specify the breach
2) Give reasonable time to remedy
3) Warn of forfeiture if not remedied
What remedy is available to court for relief from forfeiture?
Discretionary remedy available once landlord takes steps to forfeit
What is the effect of relief from forfeit?
Lease is restored as if never forfeited
What is a common relief scenario?
Tenant pays rent arrears and landlords legal costs -> Court usually grants relief
What should a mortgage lender do if leaseholder falls behind and freeholder decides to forfeit?
Mortgage lender should apply for relief from forfeiture
