Lease forfeiture – tenants entitled to full opportunity to remedy defaults

Posted on December 12, 2017

Landlords are entitled to take back possession of their properties from tenants who breach the terms of their leases. However, as one High Court case showed, tenants have a right to expect that statutory procedures are followed to the letter before they are put out on their ear.

The freehold owner of a pub served a default notice on the tenant under the lease, alleging that she had in certain respects allowed the premises to fall into disrepair. She was simultaneously served with a notice under Section 146 of the Law of Property Act 1925 and warned that the freeholder would re-enter the premises if the defaults were not remedied within seven weeks.

After the freeholder sought forfeiture of the lease, a judge found that the tenant had breached her repair and maintenance obligations and that those defaults had not been entirely remedied within the seven-week period. However, he refused to make a possession order against her on the basis that the Section 146 notice had not been validly served. By the terms of the lease, it should not have been served until 14 days after the tenant had been issued with the default notice.

In dismissing the landlord’s challenge to that ruling, the Court noted that the case raised an interesting issue of statutory interpretation. On a commonsense reading of Section 146, tenants are entitled to receive full notice of what they are required to do in order to remedy defaults. There was no authority for the proposition that a Section 146 notice may be served before a right to re-entry has actually accrued.

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