Calling time on defaulting 1986 Act tenants - by forfeiture
It is well known that bringing an end to a protected 1986 Act agricultural tenancy can be a complex and uncertain process. This article examines the option of forfeiture which is available to a landlord to determine such tenancies.
In addition to the common law notice to quit (which is the usual means of terminating a 1986 Act tenancy), a landlord should give consideration to the possibility of forfeiting a defaulting tenant whose tenancy is protected by the 1986 Act. Although this is a little used remedy, it can be a powerful remedy where available.
In order to be in a position to forfeit a 1986 Act tenancy, the tenant must be in breach of the covenants in the tenancy, and the tenancy must contain a valid forfeiture clause. The forfeiture clause will be invalid if it seeks to exclude the tenant’s right to claim compensation.
The procedure is started by a Notice being served by the landlord on the tenant, and with the Notice being compliant with the provisions of Section 146 of the Law of Property Act 1925. The Notice must therefore:
- specify the breaches of the tenancy which the landlord is complaining about;
- give the tenant a reasonable time to remedy the breaches, if indeed the breach is capable of being remedied;
- indicate if the landlord is seeking compensation in money for the breaches of the tenancy; and
- must warn the tenant that its failure to comply with the Notice within a specified period (being at least two months) could lead to the landlord re-entering the tenant’s premises and bringing the tenancy to an end there and then.
Forfeiture is often not used because even if the tenancy is brought to an end following the service of the Notice and the termination of the tenancy by the tenant’s premises being re-entered, the tenant can apply to Court for relief from forfeiture and seek to get the tenancy re-instated. However, it is not every breach of the tenancy which the Court will effectively forgive and allow the tenancy to be re-instated.
There are a number of breaches of the tenancy which the Court will scrutinise very carefully in order to evaluate whether to grant relief from forfeiture to the tenant and allow the tenancy to be re-instated – and only then, if all the breaches are remedied and with the tenant paying the landlord’s costs. Clearly forfeiture will not be appropriate in every situation, but where it can be used, it is a powerful remedy indeed.