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Should tenants be able to control premises even after they have left?

28th May 2021

Should tenants be able to control premises even after they have left?

Nyree Applegarth, a Partner in the Higgs & Sons Dispute Resolution team, looks at the difficult balancing act the Court faces when considering relief from forfeiture applications.

Although landlords have not been able to forfeit commercial leases for unpaid rent arrears since March 2020, at some point in 2021 we are all expecting the restrictions to be lifted and for forfeiture to become a well-used remedy once again. 

One of the uncertainties around forfeiture is the timeframe in which a tenant must apply to have its lease reinstated (relief from forfeiture).  If a landlord changes the locks for non-payment of rent and the tenant then wants to have the lease reinstated, the County Courts Act 1984 (section 138) fixes a six-month period for any relief application from the date upon which the landlord changes the locks.  However, very often the landlord will have taken the robust action of changing the locks because they have a new tenant waiting in the wings and they have re-let the building in a short period of time. 

It is, therefore, a difficult balancing act for the Court in a situation where a tenant does make a relief from forfeiture application after the landlord has re-let the premises.  This issue has been examined recently in the case of Keshwala -v- Bhalsod.  The tenant took a lease for a term of 20 years in 2008 and in June 2018, a quarter’s rent of £2,000 was underpaid by £500. 

On 1 September, the landlord’s agent issued an invoice for the September rent which was due on 29 September but made no mention of the outstanding £500.  On 13 September, the landlord then changed the locks.  The arrears were paid off on 24 September, entitling the tenant to apply to have the lease reinstated but no indication was given that the tenant wanted the lease back and there was then very little contact between the landlord and the tenant.  On 4 February, so over 5 months later, the landlord re-let the premises to a new tenant on a three-year lease and then on 26 February, the former tenant applied for relief from forfeiture. 

The Court decided that in this instance, they were not going to reinstate the former tenant’s lease owing to the delay in the tenant’s application.  The Court held that if the application had been made promptly, then they would have had more sympathy with the former tenant.  The tenant then launched an appeal to the High Court and was successful and had the lease reinstated.  However, the Court of Appeal reinstated the first decision stating that there was no principle that a tenant will be deemed to have acted with reasonable promptitude so long as he brings his application before the expiry of six months.  A tenant who waits for nearly six months before bringing the application keeping his landlord in the dark, and then fails to provide the Court with any explanation for the delay will, more than likely, find that the Court will conclude that he has not acted with reasonable promptitude. 

If the tenant had forewarned the landlord in September or October 2018 that he was intending to have the lease reinstated, then the Court may have had more sympathy, but the tenant’s lack of communication really did lead to its detriment here.  Clearly the message for tenants is not to just sit back and then apply for relief at the eleventh hour, but to be open and transparent with your landlord throughout.

At Higgs & Sons, we have many years of experience dealing with complex commercial property disputes. Contact us for assistance.

 

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