Waiving the right to forfeit – what can I say?

One of the remedies for a tenant breach available to landlords of commercial premises in England and Wales is to forfeit (i.e. unilaterally bring to an end) the lease. As we've blogged about previously, one pitfall that a landlord wanting to forfeit can fall into is to lose that right by "waiving" it. But what exactly is waiver? And what can the landlord say or do to the tenant without losing – or "waiving" – that right?

The basic principle is this: once a landlord is aware that it is entitled to forfeit a lease it must either: (i) use that right; or (ii) decide not to use that right. Once it has chosen not to forfeit, the right to do so for that breach will be lost forever (although in the case of a continuing breach the right may arise again). If the landlord chooses to forfeit, then the lease will no longer exist. Therefore, any action on the landlord's part that acknowledges that the lease continues to exist will be treated as the landlord decided not to use the right to forfeit.

Here are a few helpful tips on what you can do in this situation:

1. It is very easy to accidentally waive the right to forfeit the lease. The safest thing for a landlord to do is cease all communication with the tenant as soon as it becomes aware of a breach and may wish to forfeit. This includes putting in place a rent stop and ceasing to send out rent demands. Even routine correspondence could waive the right to forfeit.
2. A landlord can only make the choice once the right to forfeit has arisen. In the case of non-payment of rent, there will often be a 14- or 21-day grace period following the due date for payment before the right to forfeit will arise. It is unlikely to waive the right during that grace period.
3. A landlord can continue to pursue the tenant for rent that fell due before the right arose. For example, if the breach occurs on 30 March, a landlord can continue to pursue the March quarter's rent without waiving.
4. A landlord can have without prejudice conversations that acknowledge the lease continues to exist: but these must be clearly marked as being without prejudice with the right to forfeit reserved.
5. The right can only be waived once the landlord has knowledge of the breach. So, if a breach occurs on 1 June but the landlord only discovers the breach on 10 June, a rent demand sent on 3 June will not waive the right to forfeit.

The above points are guidance only and each case will turn on its specific facts. If you ae a landlord of commercial premises and find yourself in the above situation, please do not hesitate to get in touch with our Real Estate Disputes Team or your usual Brodies' contact.