Forfeiture of a lease


Published by a ÀÏ˾»úÎçÒ¹¸£Àû Property Disputes expert
Practice notes
In-house COVID-19

Forfeiture of a lease


Published by a ÀÏ˾»úÎçÒ¹¸£Àû Property Disputes expert

Practice notes
In-house COVID-19
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When can a landlord exercise the right to forfeit a lease?

Forfeiture is a landlord’s right to bring a lease to an end as a result of a tenant’s breach. A landlord may only end the tenancy agreement by forfeiture if there:

  1. •

    is an express right in the lease, ie the tenancy agreement contains a forfeiture clause which allows the landlord to forfeit in respect of the tenant's alleged breach. For example, the lease may provide that the landlord is entitled to forfeit the lease for failure to pay rent within 14 or 21 days of the due date, or on the occurrence of a specific event detailed in the lease (for example any type of Insolvency specified as an event giving rise to the right to forfeiture), or for any other breach of tenant covenant. By way of example, see our Precedent: Lease of whole building, or

  2. •

    has been a breach by the tenant of an express or implied condition, ie a term of the lease which is so fundamental to that lease that a breach

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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Insolvency definition
What does Insolvency mean?

This can be defined by two alternative tests (Insolvency Act 1986, s 123):

• cash flow test: a company is solvent if it can pay its debts as they fall due, no matter what the state of its balance sheet (Re Patrick & Lyon Ltd [1933] Ch 786);

• balance sheet test: a company which can pay its debts as they fall due may be insolvent if, according to its balance sheet, liabilities (including contingent liabilities) exceed assets.

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