Ending lease

[SQUIRREL13!]

Tenants are on a Small Business retail lease and are now periodic. They are many months in debt and pay the odd payment when pushed to. We are wanting to end their lease and then take them to court for the rent arrears. There is much confusion about what to notices to serve when it is a retail lease. Is a retail lease same as a commercial lease in this scenerio? Theres so much advise if they were residential tenants but no advise for the business tenants!! Does anyone have any knowledge on this please?

 

[Gyumri]

A lease is simply an agreement and so whether it is for a small or large business would make no difference - but it would be necessary to read what it states before anybody could express a view.

It might be that you don't need to go to court at all to instruct bailiffs to repossess the premises. That will depend on what the lease states.

 

[Frank the Insurance guy]

Hi @SQUIRREL13!

I assume you have a Buildings Insurance policy? Check the policy as most will provide you with a free business and legal helpline - give them a call and you will get FREE advise from a professional that specialises in the area you need help with. They will be able to tell you what your options are and how best to proceed.

 

[fisicx]

@SQUIRREL13! - can’t you ask the solicitor who drew up the lease? They are the ideal people to advise on the correct process.

 

[SQUIRREL13!]

Hi @SQUIRREL13!

I assume you have a Buildings Insurance policy? Check the policy as most will provide you with a free business and legal helpline - give them a call and you will get FREE advise from a professional that specialises in the area you need help with. They will be able to tell you what your options are and how best to proceed.

Thank you, good advise.

 

[Lisa Thomas]

Pretty sure you need to check CRAR legislation.

 

[kevinhaart]

Thank you, it was useful for my business as well!

 

[Michael Loveridge]

You basically have three options here. The first, and most drastic, is simply to `forfeit' (i.e. terminate) the lease by retaking possession. You don't need to provide any notice. You just wait till the property's empty, then go in and change the locks.

If you do this you can still sue the tenant for the rent due up to the date of forfeiture.

The tenant has a legal right to apply to the Court for `relief from forfeiture'. This is an application to the court asking for their lease back. It will usually be granted on the strict condition that the tenant pays all the rent arrears and also the landlord's legal costs. It sounds extremely unlikely that there's any risk of this.

The second option is to use CRAR - Commercial Rent Arrears Recovery. This involves instructing bailiffs, who are empowered to enter the premises and seize goods to the value of the rent. I'm not really a great fan of this, the biggest drawback being that the bailiffs have to give 14 days’ written notice to the tenant, which is more than enough time for the tenant to hide any goods that are worth something!

In your case there may well be no such goods anyway, and as you can't get blood out of a stone the CRAR may well be a waste of time and money.

The third option is to negotiate a termination of the lease (a `surrender') with the tenant. You could, for example, offer to accept half the rent arrears in return for their vacating immediately. Of course, they may have no money, so that even if they wanted to do a deal they would be unable to, but I would always advocate at least exploring this option.

 

[Solvelaw]

What I would suggest is throw a life line but first get a personal guarantee from the directors (after due diligence), then you can proceed to forfeit for any future assuming it is pure commercial and not mixed use. Otherwise as Michael says, forfeiture is the best avenue to attack. Do you have a rent deposit to fall back on?

 

[Lisa Thomas]

I thought landlords had to give 28 days notice to forfeit a lease?

I thought it's only 7 days notice under CRAR?

 

[Solvelaw]

I thought landlords had to give 28 days notice to forfeit a lease?

I thought it's only 7 days notice under CRAR?

No notice is required but proviso in lease has to be met, ie 21 days or whatever time the rent is outstanding or overdue. In this case you have compounded arears. The CRAR is right, although it was heavily extended during covid.

 

[Michael Loveridge]

I thought landlords had to give 28 days notice to forfeit a lease?

I thought it's only 7 days notice under CRAR?

No, as soon as rent is overdue a landlord can forfeit a lease for non-payment of rent without giving any notice. However, for any other breach of covenant in the lease the landlord needs to first serve a `section 146 notice', specifying the breach and giving the tenant a reasonable time in which to remedy it.

 

[Lisa Thomas]

Yes that's what I thought a solicitor recently told me the landlord had to give 28 days notice for a tenant to remedy the arrears etc before they could forfeit.

 

[Michael Loveridge]

Yes that's what I thought a solicitor recently told me the landlord had to give 28 days notice for a tenant to remedy the arrears etc before they could forfeit.

No, that's wrong.

Just to make it 100% clear - a landlord does not have to give any notice before forfeiting the lease for rent arrears. Notice is only required for other breaches of the lease.

 

[Lisa Thomas]

Ah, I thought they had to give them the opportunity to fix the breach.