Breach of Commercial Lease Agreement by Tenant

A commercial lease is a legally binding agreement, and it outlines the rights and responsibilities of both the landlord and the tenant. If the tenant breaches the lease terms, the landlord has legal rights and remedies to protect their interests.

If your tenant breaches the commercial lease, as a landlord, you have legal rights and options including claiming damages, repossession, and early termination.

If your tenant breaches your commercial lease, call our commercial lease solicitors at 0203 417 3700 for quick resolution of landlord-tenant disputes.

Table of Contents

What is a breach of a commercial lease agreement?

A breach of a commercial lease occurs when the tenant does not comply with the lease conditions and fails to fulfil their lease responsibilities.

This includes not paying rent on time, damaging the property, or using it for unauthorised purposes.

What are common ways a tenant can breach a commercial lease?

A tenant can breach a commercial lease in various ways including non-payment of rent, property damage, unauthorised use, and failure to maintain the property.

Common breaches of a commercial lease include:

1. Non-payment of rent or paying rent late
2. Property damage beyond normal wear and tear
3. Altering the property without permission
4. Unauthorised use of the premises
5. Failure to maintain the property
6. Subletting without permission
7. Failure to maintain required insurance
8. Violating operational hours or noise restrictions
9. Non-compliance with health and safety regulations
10. Illegal or immoral use of the property
11. Breaking zoning laws or lease restrictions
12. Failure to pay additional charges (e.g., taxes, utilities)

What legal rights does a landlord have if the tenant breaches the lease?

When a breach occurs, landlords have legal rights to protect their interests:

1. Right to terminate the lease: Depending on the breach, the landlord might end the lease.
2. Right to claim damages: If the tenant's actions cause financial loss, the landlord can seek compensation.
3. Right to repossession: For serious breaches, the landlord can take legal steps to repossess the property and evict the tenant.
4. Right to enforce specific performance: In some cases, the landlord can ask the tenant to fulfil their lease obligations instead of just seeking damages.

What should a landlord do before taking legal action?

A landlord should first notify the tenant of the breach and provide a reasonable opportunity to fix it, typically through a formal notice like a Section 146 Notice.

Before legal action, a landlord might:

• Try to negotiate with the tenant (quicker and cheaper option).
• Send a formal notice of breach, giving the tenant time to fix it.
• Consider mediation or alternative dispute resolution as a less confrontational option.

What legal actions can a landlord take if a tenant breaches the commercial lease?

When a tenant breaches a commercial lease, the landlord has several options. These depend on the breach type, lease terms, and goals. Options include:

• Forfeiture
• Self-help for breach of repair covenants
• Court declaration / Specific performance
• Damages
• Injunctions

Forfeiture

The landlord can end the lease by re-entering the property or applying to the court for an order to terminate the lease, typically for serious breaches like non-payment of rent or insolvency.

Self-Help for Breach of Repair Covenants

If the lease allows, the landlords can sometimes fix problems themselves and bill the tenant for it. But they must be careful not to do too much or unnecessary work.

Court Declaration / Specific Performance

The landlord can ask the Court for a declaration on the breach or to make the tenant follow the lease, if damages are inadequate.

Damages

The landlord can claim compensation for losses directly caused by the tenant’s breach, provided they can prove the connection between the breach and the loss.

If the loss is too far away, the claim might not work. Even though it's costly, it might be the best choice for big breaches.

Injunctions

An injunction is a court order to do or not do something. If a tenant is breaking the rules, like using the property without permission, an injunction can help. There are two types: interim and final. Interim ones are quick but temporary, while final ones are more permanent.

Injunctions are great for urgent problems. They can stop bad actions right away. Final injunctions help prevent future breaches.

Each action depends on the breach and the lease terms. It's advisable to get legal advice from an expert commercial lease solicitor to choose the right options.

What are the steps involved in evicting a tenant for a breach?

Evicting a tenant in the UK for breaking a commercial lease involves several steps:

Review the Lease Agreement

Check for forfeiture clauses that outline the conditions under which the landlord can evict the tenant and the procedures to follow.

Serve a Section 146 Notice

If the tenant breaches the lease (except for non-payment of rent), the landlord must serve a Section 146 Notice under the Law of Property Act 1925.

This notice tells the tenant about the problem and gives them time to fix it.

If the tenant can fix the issue, they have a certain time to do so. If they don't, the landlord can take further steps.

Decide on Forfeiture

The landlord can either forfeit the lease by re-entering the premises (peaceable re-entry) or by applying to the court for an order for possession.

Peaceable re-entry should be done carefully to avoid any claims of unlawful eviction. Getting advice from a legal expert is wise before starting eviction proceedings.

Can a landlord terminate the lease early if a tenant breaches it?

Yes, a landlord has the right to end the lease early if the tenant breaches it, typically through the forfeiture clause specified in the commercial lease.

The landlord must follow legal procedures, including serving a Section 146 Notice and ensuring the breach justifies termination. Legal advice is recommended to avoid unlawful forfeiture.

What happens if the tenant does not fix the breach?

If the tenant doesn’t fix the breach in time, the landlord can take further steps. This might include ending the lease, suing for damages, or starting eviction proceedings.

How can a landlord avoid disputes?

Landlords can avoid disputes by:

• Drafting clear lease agreements.
• Conducting regular property inspections.
• Communicating openly with the tenant.
• Addressing minor breaches quickly.

Should a landlord consult a solicitor when dealing with a breach of lease?

Yes, it's recommended to consult an experienced commercial lease solicitor. They can guide you through the process, help with legal notices and litigation, and avoid costly mistakes.

Addressing a breach depends on the breach type, lease terms, and your goals. Goals include whether you want to remove the tenant or fix the breach.

• Legal Advice: A solicitor can guide you on your rights and options if your tenant breaches the lease.
• Drafting Notices: They can help you prepare and serve legal notices, such as a Section 146 Notice.
• Negotiation: A solicitor can assist in negotiating a resolution or settlement with the tenant.
• Forfeiture: They can advise on the process of lease forfeiture and ensure it’s legally compliant.
• Litigation: If necessary, a solicitor can represent you in court to enforce lease terms or seek damages.

Need expert legal assistance?

Call our Wembley Solicitors at 0203 417 3700 if your tenant breaches your lease and let our commercial lease solicitors help resolve your dispute.