Forfeiture, also known as the right of re-entry, is a mechanism by which a landlord can terminate a commercial lease following the tenant's breach of its terms.
What does it mean if a lease is forfeited?
A lease that has been forfeited has, in simple terms, been terminated.
How do I know if I have the right to forfeit a lease?
Only leases with an express right of forfeiture or re-entry can utilise this mechanism. A right to forfeit cannot be implied in a lease, so if the lease is silent, this right is unlikely to exist.
The right to forfeit and its terms of operation are usually found in the lease under the "forfeiture" or "re-entry" clause.
If a lease is forfeited without a right to do so, a landlord could face serious consequences.
I have a right to forfeit and the tenant is in breach of the lease, what do I do now?
Forfeiture is not obligatory and you can choose whether or not you wish to pursue this.
If you do not want to terminate the lease you may want to consider alternative options to remedy the tenant's breach. For example, debt recovery, carrying out repairs, pursuing guarantors.
When can a lease be forfeited?
A landlord may choose to forfeit a lease if the tenant is in breach of its obligations.
The lease will usually set out the breaches for which the right to forfeit will arise and any time periods that apply to that breach.
The right to forfeit must have arisen before forfeiture can be carried out.
It is important to note that a right to forfeit can be waived i.e. lost. This often happens unintentionally and landlords should be aware of waiver before proceeding with forfeiture.
Forfeiture for non-payment of rent
If a tenant has fallen into rent arrears, the landlord may want to consider forfeiting the lease.
If forfeiture is the desired route, care must be taken not to waive the right to forfeit. Landlords should therefore ere on the side of caution in accepting and demanding rent and should seek legal advice from a landlord and tenant solicitor on their position before doing so.
A landlord does not need to give prior notice to its tenant if it intends to forfeit for non-payment of rent. In fact, this could be detrimental to the landlord.
Tenants should do all they can to ensure rent (and any other sums reserved as rent under the lease) is paid on time and in accordance with the terms of their lease to avoid the possibility of forfeiture arising.
Forfeiture for other breaches of covenant
A landlord may forfeit a lease if the tenant is in breach of any other of its covenants or carries out actions that are not authorised in the lease. This may include:
- subletting without permission
- undertaking unauthorised alterations
- failing to keep the premises in repair
- operating a business from the premises outside the permitted use
- causing a nuisance to the landlord and/or other occupiers
- breaching statute law
In instances here a lease is forfeited for a breach of covenant that is not non-payment of rent, the landlord must give prior notice to the tenant giving them the opportunity to remedy the breach before they can lawfully proceed with forfeiture.
Forfeiture due to tenant insolvency
It is very common for a commercial property lease to permit a landlord to end a lease if the tenant becomes insolvent. This would cover a situation where an individual becomes bankrupt or if a company enters into administration or liquidation.
A landlord has to serve a section 146 notice on a tenant before they can terminate a lease based on insolvency.
A landlord's right to take action if a tenant becomes insolvent may be restricted depending on the form of insolvency and so a prudent landlord should always take legal advice before terminating a lease because of insolvency.
How can you forfeit a lease?
A landlord can forfeit (end) a lease by either:
- Physically changing the locks (known as peaceable re-entry); or
- Applying to the Court for an Order that the lease has been terminated.
The method adopted will depend on the facts of each case but is usually determined by the nature of the default and the tenant's conduct.
How to carry out forfeiture
Forfeiture is usually carried out outside of the tenant's operating hours to minimise the chance of a conflict on site. Bailiffs are often instructed to carry this out.
To ensure security, a locksmith usually changes all of the locks at the premises.
The landlord or its agent will usually take an inventory along with a detailed schedule of its condition.
A landlord can still pursue the tenant for any sums that remain due and owing under the lease up to the date it ended, for example, rent arrears and repair costs.
Does the landlord need to notify the tenant of their intention to forfeit the lease?
Not always, and in some instances, notifying the tenant could actually result in the right to forfeit for that particular breach falling away.
For any breach apart from non-payment rent, the landlord must first serve a notice on the tenant advising of the breach, and giving the tenant a chance to remedy the breach, if that is possible.
Where insolvency is the reason for the forfeiture, it may be necessary to liaise with the Insolvency Practitioner before taking any action.
Will forfeiting a lease end it immediately?
Provided it has been lawfully forfeited:
- a lease forfeited by peaceable re-entry will be deemed terminated immediately upon re-entry.
- a lease forfeited by court proceedings will be deemed terminated upon service of the proceedings upon the offending tenant.
What to do before forfeiting a lease
- Be sure termination of the lease, and in turn an empty premises, is what you want;
- Check to see if there are other, and more suitable options to get the breach remedied that does not result in the lease ending;
- Check the terms of the forfeiture/re-entry clause in the lease. You may want to take legal advice on this before proceeding;
- Satisfy yourself that no one is using the premises for residential purposes, whether permitted or not. If they are or you have good reason to believe they are, the only method by which you can forfeit the lease is by court proceedings.
- A prudent landlord will cease all correspondence with the tenant as soon as forfeiture is contemplated.
- A landlord looking to forfeit the lease due to non-payment of rent will also stop issuing rent demands and accepting payments from the tenant until after forfeiture takes place;
- Consider any impact this may have on other occupants of the premises; and
- Ensure you have not waived your right to forfeit.
What is a waiver of the right to forfeit?
Waiver of the right to forfeit essentially means that right to forfeit the lease for that particular breach has been lost.
How does waiver of the right to forfeit occur?
A waiver can only occur once the landlord knows of the breach.
If, upon having this knowledge, the landlord continues to treat that lease as continuing to exist and communicates this to the tenant, the right to forfeit for that particular breach will have been waived.
For some types of breach, the right to forfeit will renew each day the breach remains, so waiver will not be an issue; however, for example, the tenant's breach of its repair obligations.
This is not the case for all breaches, particularly those considered as a 'once and for all' breach. An example of this is non-payment of rent.
Waiver and non-payment of rent
If waiver occurs after the landlord learns of the breach, the right to forfeit for that particular breach will disappear, and the landlord will have to wait for a fresh breach to occur before the right to forfeit will arise again.
Waiver and breach of covenant
Determining whether a right to forfeit has been waived will depend heavily on the breach in question and whether it is a reoccurring breach.
A reoccurring breach is one that renews each day, and with it, the right to forfeit for that breach.
'Once and for all' and 'continuing' breaches of covenant?
Whilst determining this will very much turn on the facts in each case, below is an indication of how some common breaches may be treated:
| Breach | Continuing or once and for all |
| Non-payment of rent | Once and for all |
| Unauthorised assignment | Once and for all |
| Unauthorised subletting | Once and for all |
| Other unlawful sharing of occupation | Continuing |
| Unauthorised alterations | Once and for all |
| Failing to keep premises in repair | Continuing |
| Failing to put premises in repair | Once and for all |
| Illegal/immoral use | Continuing |
What if I have waived my right to forfeit?
If you have waived the right to forfeit for a particular breach of the lease, you should not proceed with forfeiture. You must wait until a subsequent right to forfeit arises before such action can be taken.
Any forfeiture that proceeds where a waiver has occurred will be unlawful.
What if the lease is for mixed-use residential and commercial premises?
Due to the Protection from Eviction Act 1977, a lease that includes residential premises cannot be forfeited by re-entry. The lease can only be forfeited by court proceedings.
What if there are subtenants on the premises?
The act of forfeiture ends the lease and all interest deriving from it. As such, all subtenancies will be terminated upon forfeiture.
What about the tenant's belongings left on the premises?
Often, the lease will include a clause that sets out what will happen with any goods remaining in the premises at the end of the lease. Sometimes, the landlord will have obligations to look after these and/or rights to dispose of the goods, and they may or may not have to account for this to the tenant. It is unlikely that a tenant will be allowed to remove valuable items from the premises as the landlord may look to levy these against any outstanding sums due under the lease.
A prudent landlord will usually display a notice at the premises alerting the owner of items that remain there that they have a time frame in which to collect their goods; otherwise, they will be deemed abandoned. This is known as a Torts Notice.
A tenant can be granted temporary access to the premises collect its belongings but this is usually under strict supervision and upon proof of ownership being presented.
What can a tenant do if their lease is forfeited?
If a tenant's lease has been forfeited and they want to go back in the premises, action must be taken swiftly and could include:
- Checking that the forfeiture was lawful
- Remedying the breach where possible and as soon as possible i.e. settle all arrears
- Applying for relief from forfeiture to get the lease reinstated (if the tenant wants to continue occupation under the forfeited lease)
- Negotiating a new tenancy with the landlord (if relief from forfeiture is not an option or new terms of occupation are required/better suited)
If a tenant's lease has been forfeited but they do not want to reoccupy the premises, they should:
- Check the terms in any TORTs notice that has been served or displayed at the premises after the lease was forfeited
- Make arrangements to collect all belongings that remain in the premises
- Check the termination provisions in the forfeited lease to see what post-termination obligations remain, such as repair obligations, document delivery obligations, rent obligations, costs, etc.
- Liaise with the landlord regarding a settlement agreement to address all outstanding matters.
My landlord has forfeited my lease. How do I get back in?
Forfeiture effectively ends a lease, meaning the lease under which the tenant occupied the premises no longer exists. To have the lease reinstated, an application for Relief from Forfeiture must be made to the Court.
It is at the Court's discretion whether the lease will be reinstated, but this will usually be granted, provided the tenant has agreed to remedy the offending breach. The tenant will usually be expected to reimburse the landlord for the costs incurred in the forfeiture process and any interest due under the lease terms.
Relief from forfeiture
Although a lease ends once it has been forfeited, the tenant can apply to the Court to have the lease reinstated as if it had never been terminated. This is known as relief from forfeiture.
Any application for relief from forfeiture should be made promptly but within 6 months if the landlord forfeited by peaceable re-entry.
Relief from forfeiture, if granted, will essentially overturn the forfeiture and reinstate the lease as if was never actually terminated.
An application for relief from forfeiture must be made promptly. The Court will consider all the circumstances in each case, but usually, the longer the delay, the less likely it is to grant a tenant relief.
Relief from forfeiture can only be granted by the Court; it cannot be conferred by a landlord or by mutual agreement between the parties.
Relief from forfeiture for non-payment of rent
Only the Court can grant an order for relief and reinstate a lease that has been forfeited for non-payment of rent. The landlord and tenant can agree on the provisos for this, but the landlord cannot unilaterally grant relief; it requires the Court's consent.
Unlawful forfeiture
If a lease has been unlawfully forfeited, it will continue as if it had not ended, and the landlord could be liable to reimburse the tenant for all costs and losses suffered during the period it was denied access to the premises.
Can I re-let a commercial premises to new tenants immediately after forfeiture?
Understandably, and from a commercial perspective, a landlord will want to re-let the premises as soon as possible.
However, a prudent landlord should not grant a new tenancy to a new tenant as soon as the lease has been forfeited without certainty that the previous tenant will not apply for relief or dispute the lawfulness of the forfeiture.
If the premises are re-let and it transpires that the old tenant has obtained relief from forfeiture or that the forfeiture was unlawfully, the landlord could find itself with two tenants, each holding a tenancy for the same premises.
What happens if I am a subtenant and my landlord's lease is forfeited?
If the headlease is forfeited, any sublease automatically ends, putting any subtenants in a very vulnerable position.
A subtenant would have the right to apply for relief from forfeiture to reinstate their lease. Still, there is a general principle that if the head tenant does not apply to have their lease reinstated, but the subtenant wants their right to occupy the premises to continue, the subtenant can only ask the Court to grant them a lease based on the terms of the headlease, which are not necessarily the same terms as the sublease. This means that the subtenants have to take on a much more onerous lease than they had previously and may have to pay a lot more rent.
A case was decided in early 2025, which shows how this works in practice. The case was called Derwent Lodge Estates Limited v Signature Living Hotel Limited. The case concerned a seven-storey building in Liverpool with mixed commercial and residential use. The building was subject to various leases, including a headlease of the entire building, which placed a responsibility for ensuring the maintenance of the structure of the building on the head tenant. The lease also reserved a significant rent payable to the landlord of £80,000 per annum, which could be increased.
Below this sat a sublease of the first to seventh floors, which contained several residential apartments and common parts and then individual subleases for the residential apartments, which had been granted at a premium by the head tenant. The head lease of the building was forfeited following the head tenant's insolvency in September 2022 because they had not paid rent. This automatically meant that all of the subleases were also terminated. The people who held 42 residential apartments in their building and their mortgage companies applied for relief from forfeiture.
The landlord did not object to relief being given, but they did contest the relief that was being sought by the subtenants because they were asking the Court to grant them a new head lease of only part of the building. In practical terms, that meant that there were new obligations on the landlord that it had not had in the previous lease structure such as maintenance obligations of the building structure and responsibility as the Accountable Person for the purposes of the Building Safety Act 2022.
In line with established principles, the landlord, therefore, proposed that any relief given to the subtenants had to be on the same terms as the head lease, i.e. they had to take a lease of the whole building with full repairing and insuring obligations on the apartment owners and at the same level of rent, namely £80,000 per annum. The only covenant the landlord was prepared to give the tenants was quiet enjoyment.
The first time the Court considered the matter, the judge found in favour of the landlord. She decided that the apartment holders should get relief from forfeiture, but only if they were prepared to accept the head lease that mirrored the previous lease of the whole building. That would see the apartment holders becoming the landlords of the commercial units in the building, taking on all repairing obligations, and paying the head rent in full. If they wanted to, they could assign the new head lease to a new management company, which would grant new residential subleases to the apartment holders. This was not the outcome that the 42 apartment holders wanted.
However, the first-instance judge did give permission to the apartment holders to appeal, and the matter was then sent to be considered by a circuit judge. The appeal was then dismissed, and the circuit judge upheld the judge's first decision.
This decision serves as a reminder that the landlord has to be put in the same position as both before the breach of covenant and the forfeiture occurred and is a salutary lesson to tenants when considering making an application from forfeiture that they fully understand what they might be potentially taking on.
When can a landlord change the locks?
A landlord can change locks without serving a Section 146 notice if rent is unpaid, but in other circumstances, no locks can be changed until a Section 146 notice has been served and the time for complying has passed.
Even if a Section 146 notice has been served and the tenant has not remedied the breach, a landlord should still always seek legal advice about whether they can change the locks, particularly since the right to forfeit may have been waived.
Can a landlord change the locks if rent is not paid?
Yes, provided there has been no waiver of the right to forfeit.
Can a landlord change the locks without giving the tenant notice?
This applies only if the breach of the lease is non-payment of rent. In all other circumstances, a Section 146 notice has to be served first.
Common mistakes landlords make during forfeiture
These include :
- Not properly understanding if you have the right to forfeit
- Serving an invalid Section 146 notice
- Serving a section 146 notice but not allowing a sufficiently reasonable period of time for compliance
- Waiving the right to forfeit and communicating with the tenant and/or accepting rent
This information is for guidance purposes only and does not constitute legal advice. We recommend you seek legal advice before acting on any information given.
