When and how to use them if a tenant breaches the terms of their contract
Strikes Property Services provide specialist services to commercial and residential landlords and property owners, who need to reclaim possession of their properties and recover owed debts – in a nutshell, we’re the people you hope you don’t need to call! We know that the areas we work in are often fraught with confusion and stress – we’re always happy to help, by sharing our extensive knowledge of property.
We thought we’d start with the fundamentals of Forfeiture and Section 146 of the Law of Property Act 1925. Legislation can often subtly change, so we think it’s always worth refreshing your knowledge.
A word to the wise…
Before we dive into the nuts and bolts, it’s worth noting that Section 146 Notices should always be used thoughtfully and with a modicum of caution. Whilst there can be no doubt that they are a useful tool in a landlord’s armoury, Section 146 Notices, or Forfeitures as they’re also known, can yield unwanted results if used incorrectly or in the wrong circumstances. Thankfully, forewarned is forearmed as they say…
The most common instances in which it would be ill-advised to serve a Section 146 notice is as an “initial threat”. We sometimes have requests from commercial property managers who want to “send a message” or “encourage” tenants or leaseholders, who are in breach of contract, to address their issues. However, we have been privy to cases in which this approach has backfired, leading to an empty premises and huge costs (not served by Strikes I hasten to add!). Another consequence of serving a Section 146 and then not following it through, would be that you would show your tenant your hand, and therefore any weaknesses, which could lead to expensive and unnecessary legal wrangles.
The long and short of it is, that when used in conjunction with sound legal advice, Section 146 Notices will, more often than not, lead to the outcomes you need.
So, what exactly is a Section 146 Notice?
A Section 146 Notice of the Law & Property Act 1925 allows a landlord to commence Forfeiture proceedings against a tenant (leaseholder) following breaches of the lease (breach of covenant)
What reasons are there for serving a Section 146 Notice?
There are many reasons why a notice may be served, the most common one to date being unpaid service charges – these could also be, but not limited to:
- Sub-letting without consent
- Alterations to a building without consent
- Damage to a property
- Nonpayment of service charges or other related charges
What needs to be included in a Section 146 Notice?
The notice must detail the breach(es) and allow sufficient time for these to be remedied, how they need to be done – and the consequences if they are not.
By serving this notice, the landlord has started the process of exercising their right to Forfeiture – that is the landlord wishes to prematurely end the lease.
How to ensure the Notice is valid:
For a Section 146 to be valid, certain criteria must be met within the notice itself:
- What the breach or breaches are (ideally in detail)
- Timeframe in which the breach should be remedied
- Requirement to remedy the breach
- Monetarily compensate the landlord for the breach i.e. the costs of the Section 146
If the Forfeiture is carried out without ensuring that is valid, could have serious legal consequences for a landlord. It is therefore important to take advice before commencing with the notice and any subsequent actions.
What timeframe should be given on the notice?
Most of the notices we serve on behalf of landlords and agents are 21 days – however, the timeframe must be always be reasonable and considered on a case-by-case basis. If the tenant has breached the contract by making alterations to a building, 21 days’ notice would possibly not be a reasonable timeframe for rectification, so a longer period might be required.
Common sense should always be applied. Please always feel free to get in touch with us for advice.
How do you serve a Section 146 Notice?
The most common way to serve a Section 146 Notice these days is electronically – however recorded post or the use of a process server can also be used. The most important part of the serving is obtaining proof of service.
What happens if the Section 146 Notice expires?
Assuming the notice has expired and the reasons for the notice have not been remedied, then the next stage is to forfeit the lease. This can be done by way of peaceable re-entry.
What about rent if the tenant has rent outstanding?
This should be covered within the lease – normally under the Forfeiture clause.
Still unsure or need more specific advice?
That’s what Strikes is here for! We keep up to date with the law, so you don’t have to – and are always more than happy to share our knowledge and legal advice, without any obligation.
