In a leasehold context, ‘forfeiture’ refers to terminating or bringing a lease to an end. It is a quite powerful and well established remedy used by the landlord. The right to forfeit is usually included in all residential and commercial leases. While in case of a commercial lease there isn’t a great deal of statutory protection against forfeiture, but a residential lease is backed by a lot of protection. Rarely have landlords been successful in forfeiting a residential lease.
The tenant has the right to apply for relief against forfeiture; in other words the right to apply to the court for an order restoring the lease. The usual position is that the court is inclined to allow such application for relief given the tenant cures his breach of covenant, e.g. pays any arrears.
Forfeiture may be a particularly useful remedy for a landlord of an insolvent tenant.
Both landlords as well as tenants require professional guidance when it comes to forfeiture of lease. A number of factors have to be considered. Timing is very important for a landlord and when it comes to residential leases there are several procedural steps that need to be taken before making a forfeiture claim. A tenant in breach of covenant may also be able to take steps to obstruct his landlord’s attempt to forfeit the tenant’s lease.
Forfeiture may be specifically of help to a landlord of an insolvent tenant.