If a commercial tenant has failed to pay their rent in accordance with their Lease Agreement, the landlord has various options of enforcement open to him. These include Statutory Demands, Forfeiture and Issuing a claim.
Statutory Demands are a demand for payment from the relevant individual or business within 21 days (as long as the payment is not disputed). If payment is not made you have the ability to bring bankruptcy or liquidation proceedings against that individual or business. Should these proceedings occur and complete, this will have a detrimental effect on the individual and the business from a financial and business point of view.
With Forfeiture , as long as the Lease provides the relevant clause, a landlord may forfeit the lease if the rent remains unpaid. This means that the landlord may enter the property, change the locks and ensure that the tenant cannot gain access until the rent payments (and other expenditure incurred) have been paid. Forfeiture causes havoc for businesses, especially restaurants or shops as they cannot trade if they cannot gain access. This is used as a short sharp shock to ensure the tenant pays quickly. However landlords should be aware that this route is not always guaranteed especially of the tenant does not have the funds to pay the rent. The landlord could end up with a forfeited lease and an empty property.
At any time during a lease a landlord can bring a claim in the courts for unpaid rent against the tenant. This is sometimes preferable to forfeiture depending upon the financial situation of the tenant, especially as a Judgment can be enforced for 6 years after it has been ordered. The necessary procedures will need to be followed and we can provide advice on this aspect if it is required.
We are able to advise both landlords and tenants on all aspects of rent arrears recovery and enforcement required. If you have any questions or require advice please do not hesitate to contact a member of our team.