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My commercial tenant has stopped paying rent. What are my options?

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EVEN with the after-effects of the pandemic seemingly at an end, landlords are still faced with the problem of commercial tenants not paying their rent and going into arrears. This is, clearly, very frustrating for landlords, especially in incidents when the tenant provides no explanation. Here are some suggestions landlords may wish to consider and the action that can be taken, if necessary.

Open the lines of communication

Has the tenant contacted the landlord to explain the reason for not paying their rent or has payment simply stopped? Before acting, it would be worth attempting to contact the tenant to find a reason for the non-payment of rent. They could have a legitimate reason for stopping their payments.

Where there is a landlord and tenant relationship, it will always be beneficial for issues to be dealt with amicably. It will also stop the landlord from incurring costs unnecessarily.

Can the landlord relet the commercial property easily?

There are also commercial decisions to take into consideration. Is the property going to be easy to relet should the landlord decide to evict the tenant? Either way, this will impact the landlord’s decision to possibly evict the tenant.

Is there a forfeiture clause within the commercial lease?

If the tenant has not been contactable, the reason provided for non-payment of rent is not satisfactory and/or the landlord decides to evict the tenant on the basis that the property will be easy to relet, the landlord must make sure that they are able to forfeit the lease on the basis of non-payment of rent.

This is a standard clause within commercial leases but the landlord would not be able to proceed with an eviction if this clause does not exist.

Landlords must be extremely careful to not waive their right to forfeit the lease. If a landlord makes a demand for the unpaid rent, then this could show that the landlord accepts that the lease is continuing even though the rent is unpaid.

Instruction of High Court Enforcement Agents

If there is a forfeiture clause within the lease and the landlord has not waived their right to forfeit the lease, landlords would need to instruct High Court Enforcement Agents to ‘peaceably reenter the property’. This would involve the instruction of a locksmith to change the locks at the premises so that the tenant is no longer able to gain entry.

At this time, the lease will be at an end. It is worth noting that this will not be possible if there is a residential element to the property. If this is the case, a Court Order must be obtained.

Collection of goods

After eviction, landlords do not own the goods left at the property by the tenant. Tenants must be provided with a reasonable time to clear the goods (usually 14 days) and a notice should be left on the door of the property to make them aware of this.

Application for relief from forfeiture

If a tenant wants to continue with the lease, they must make an application to court. For this application to be successful, tenants must pay the rental arrears and the landlord’s costs.

How Neves Solicitors can help

Neves Solicitors takes a practical approach to problem solving, focusing on the overall objectives of our clients.  Our dispute resolution team has many years of experience in a wide range of commercial dispute matters including debt recovery, breach of contract claims, injunctions, shareholder and partnership disputes, PR/media and reputation management, commercial landlord and tenant issues, and land related disputes.

Whatever your commercial dispute, Neves Solicitors has specialists able to assist. Get in touch by calling 0330 0945 500 or emailing info@nevesllp.co.uk.

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