For most commercial landlords, it has been over a year since they have been able to use their potent remedies of forfeiture and insolvency proceedings against tenants in rent arrears. Throughout this period landlords have been encouraged to have open and transparent discussions with their tenants, safely in the knowledge that such discussions, and the receiving of partial payments, would not waive their right to forfeiture in the future.
What happens if a commercial landlord has a tenant in arrears?
From 1 July 2021, a landlord with a tenant in arrears will have a stark choice of either exercising forfeiture rights or treating the lease as ongoing. A landlord can inadvertently treat a lease as ongoing by action or inaction which affirms the lease including receiving partial payments or discussing the lease with tenants. If a lease is treated as ongoing, forfeiture rights will potentially be waived for accrued arrears, meaning a landlord may need to wait for new arrears before they can forfeit and recover possession of the premises. This may prove disastrous for landlords who have not received full rent for over a year and have a demand for premises from new viable tenants.
What should a commercial landlord do?
Landlords with commercial premises occupied by tenants in arrears are encouraged to contact our dedicated team for tailored advice on how the end to restrictions on 30 June 2021 will affect their options and forfeiture rights.
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