A recent case at the Lambeth County Court serves to highlight the importance of re-formalising the landlord and tenant relationship where a tenant is let back in to the premises after the landlord has locked him out for non-payment of rent.
Almost all commercial leases contain a “forfeiture” provision – essentially allowing the landlord to take back the premises if the tenant has failed to pay his rent for a specified period (usually 7, 14 or 21 days) after rent has become due. The landlord re-enters the premises (taking “peaceful possession”) by instructing a certified bailiff to enter – usually at the crack of dawn – and change the locks. The position in law is that at that point, the landlord and tenant relationship comes to an end. The tenancy is terminated.
What happens next is a swift phone call from tenant to landlord agreeing to immediate payment of the arrears in order to be let back in to the property. Question: can the landlord and tenant simply agree between themselves that tenancy then continues as it was? Answer: No. The tenancy has ended. It cannot be re-ignited without an order of the court.
In Zestcrest Limited v County Hall Green Ventures Limited [2011] the landlord forfeited for rent arrears. The tenant paid up and was let back in. However, the landlord insisted that re-entry was on the basis that the tenant promised to make an application to court under section 139 of the County Courts Act 1984 for relief from forfeiture. The landlord insisted that the parties could not simply re-ignite the former tenancy. The tenant contended that they could and that consequently the court application was a waste of time and money. The tenant made the application for relief from forfeiture, but claimed its costs of doing so from the landlord.
The District Judge vindicated the landlord. Upon forfeiture the tenancy came to an end. The parties had no power to simply re-ignite the tenancy. Only the court could do that by granting an order for relief from forfeiture under the 1984 Act. The landlord had been entirely correct to insist that the tenant make the application for relief. Without it, the reinstated occupation would be an entirely new tenancy under which the tenant would acquire lease renewal rights pursuant to the Landlord and Tenant Act 1954 and which would be clearly detrimental to the landlord. Moreover, the court ordered the tenant to pay the landlord’s legal costs of the court application – the tenant had unreasonably opposed the necessity of the application and had, in the process, driven up the costs.
For advice and assistance on any issues with commercial tenancies, call David Wise on 020 7288 4787