As a commercial tenant or landlord, the key word involved is ‘business’. You are in the commercial property world to make money. But when things go wrong and certain rules are not met, that can mean a loss of money, which nobody wants.
Whether you're a landlord seeking to reclaim your property or a tenant facing potential eviction, understanding commercial eviction is crucial. Either way, your business is on the line, and understanding commercial eviction can help you work through it, and even avoid it.
In this article, we shed light on the commercial eviction process, and outline the rights and responsibilities of both landlords and tenants.
Can I evict a commercial tenant if they have not paid the rent?
Can I evict a tenant if they have breached the terms of their lease?
How can landlords legally prepare for a commercial eviction?
How can commercial tenants protect themselves from eviction?
What is commercial eviction?
A commercial tenant is an individual or entity that leases or rents commercial property from a landlord for business purposes. This could include leasing office spaces, retail locations, warehouses, industrial sites, or any other type of property used for commercial activities.
Commercial eviction is a legal process where the landlord looks to remove a tenant from a commercial property due to reasons such as non-payment of rent or breach of lease terms.
The process typically begins with the landlord serving a formal notice to the tenant, detailing the breach and allowing a period for the tenant to remedy the issue. If unresolved, the landlord may proceed to court to obtain a possession order.
What reasons are there to evict a commercial tenant?
The most common reason for eviction is the failure of the tenant to pay rent on time. Commercial landlords typically provide a grace period for rent payment; however, consistent failure to meet this obligation can lead to eviction proceedings.
There might also be a breach of the lease terms. Tenants are required to meet all terms outlined in the lease agreement, which can include restrictions on the use of the property, subletting portions without permission, or failing to maintain the property in a manner agreed upon. As well as this, using the leased property for illegal activities or purposes explicitly prohibited in the lease agreement can result in immediate grounds for eviction. This can include conducting a business that is not permitted under the terms of the lease.
Or, if a tenant causes significant damage to the property beyond normal wear and tear and fails to repair the damage, the landlord may pursue eviction to recover the property and mitigate any further loss or damage.
At the end of a lease term, if a renewal agreement is not reached or the landlord chooses not to renew the lease, the tenant can be asked to vacate the property. While this may not be an eviction in the traditional sense, it is a legal method for a landlord to regain possession of their property.
Landlords must follow a legal process when evicting a commercial tenant, which we explore in this article.
How does the commercial eviction process work?
Landlords must follow specific steps to lawfully remove a tenant from their property. The process typically starts when a tenant violates the lease terms, such as failing to pay rent or using the property for unauthorised purposes, as we discussed earlier.
The landlord must then serve the tenant with a formal notice of the breach.
The notice must detail the specific breach and often provides a remedy period during which the tenant can correct the issue and avoid eviction. For instance, a section 146 notice is needed for breaches other than non-payment of rent, outlining the breach and any remedial action required.
If the tenant fails to remedy the breach within the specified period, the landlord may continue with forfeiting the lease. This can be done either through peaceable re-entry, where the landlord changes the locks when the property is empty, or by applying to the court for a possession order.
Should the matter require court intervention, the landlord will need to apply for a possession order. This stage involves presenting the case before a court, demonstrating the breach, and obtaining a legal mandate to evict the tenant if the breach is not remedied.
Once a possession order is granted, the tenant is typically given a final period to vacate the premises voluntarily. If the tenant fails to leave, the landlord may employ bailiffs or enforcement officers to carry out the eviction.
Throughout the eviction process, both landlords and tenants may face various legal and financial implications. Landlords must carefully follow legal procedures to avoid claims of wrongful eviction, while tenants must address the breach or face potential eviction and its associated costs.
How do I evict a commercial tenant without a lease?
Evicting a commercial tenant without a formal lease agreement involves a nuanced legal process, as the lack of a formal lease means there are no written terms outlining the conditions for eviction. However, eviction is still possible.
Without a lease, the grounds for eviction might be more limited and generally revolve around non-payment of rent or the occupant's holdover status after any agreed period has ended.
Even without a formal lease, it's usually required to provide the tenant with notice of the intent to evict. The notice period and format might depend on local laws or any verbal agreements that were made at the commencement of tenancy.
Since there’s no lease to specify eviction terms, the process must align strictly with local commercial tenancy laws. This often involves filing for eviction with a court or local authorities and obtaining a legal order for eviction.
Given the potential complexities and legal risks involved, consulting with a solicitor experienced in commercial property law is crucial. A solicitor can provide advice tailored to your specific situation, helping to navigate the eviction process while minimising legal risks.
In some cases, you may need to go to court to obtain a possession order, especially if the tenant refuses to vacate after receiving notice. The court will assess the situation and, if warranted, issue an order that allows for the eviction of the tenant.
If the tenant does not voluntarily leave after a court order, you may need to use bailiffs or other legal enforcement mechanisms to physically remove the tenant from the property.
It's important to note that evicting a tenant without a lease can present unique challenges, including the lack of clear terms to enforce. This underscores the importance of having a formal, written lease agreement for all commercial tenancies to protect the interests of both landlords and tenants.
How long does a commercial tenant eviction take?
Evicting a commercial tenant can take anywhere from a few weeks to several months. The quickest evictions tend to be for clear-cut cases of non-payment of rent where tenants do not dispute the eviction, while contested evictions or those involving breaches of other lease terms can take much longer.
For non-payment of rent, a landlord may issue a demand for payment with a short compliance period, typically around 14 days. Depending on what the tenant does from this point, will have an impact on the time it takes.
If the tenant remedies the breach or vacates the premises within the notice period, the process can be relatively quick. However, if the tenant disputes the eviction, the process can extend significantly.
If the matter proceeds to court, the timeline can extend further, depending on court schedules and the complexity of the case. The process includes filing for eviction, awaiting a court hearing, and then obtaining a court order for eviction, which itself may provide an additional period for the tenant to comply before forced eviction is enacted.
What is forfeiture in commercial property?
Forfeiture in commercial property refers to the right of a landlord to terminate a lease and take back possession of the property before the lease term has ended, due to a breach of the lease terms by the tenant. This is used as a last resort when a tenant fails to comply with the conditions in the lease agreement, such as non-payment of rent or other violations.
The process of forfeiture typically begins with the landlord serving the tenant a formal notice, detailing the breach and possibly offering an opportunity to remedy the situation within a specified timeframe. If the tenant fails to address the breach, the landlord can then proceed to re-enter the property, either through peaceable re-entry (changing the locks when the property is unoccupied) or by obtaining a court order for possession.
However, it's important to note that the right to forfeit must be clearly stated within the lease agreement, and landlords must carefully follow legal procedures to avoid claims of wrongful eviction. Tenants also have the right to apply to the court for relief from forfeiture, which, if granted, can allow them to retain possession of the property under certain conditions.
What rights do commercial tenants in the UK have?
Commercial tenants in the UK have a range of rights designed to protect their interests when leasing commercial properties. These rights are outlined in the Landlord and Tenant Act 1954, and can significantly affect lease negotiations, tenancy duration, and the conditions under which a tenancy can be terminated.
This Act gives commercial tenants the right to remain in the property after the expiry of the lease under similar terms, unless the landlord can provide valid grounds for possession that are recognised. Tenants wishing to end their lease at the contractual expiry date can serve a Section 27 Notice on the landlord, whereas those seeking a new lease can serve a Section 26 Notice to propose the terms of the new tenancy.
Additionally, commercial tenants have responsibilities which, when fulfilled, protect their rights. These include paying rent and service charges on time, adhering to health and safety regulations, and maintaining the condition of the property. Ensuring these responsibilities are met can prevent disputes and provide a stronger position in negotiations or in protecting tenancy rights.
The rights under commercial leases also extend to Security of Tenure as provided by the Landlord and Tenant Act 1954, allowing business tenants to request a new lease upon the expiration of the current lease, subject to certain conditions. This right is critical for businesses seeking stability and long-term occupancy of their commercial premises.
However, these rights can be waived if the lease is "contracted out" of the security of tenure provisions of the Act, emphasising the importance of understanding the lease terms and seeking legal advice where necessary.
Can I evict a commercial tenant if they have not paid the rent?
Yes, you can evict a commercial tenant for not paying the rent, but specific procedures must be followed to ensure the eviction is legal and enforceable.
The eviction process for non-payment of rent often starts with the landlord serving a formal notice to the tenant, demanding payment of the overdue rent. If the tenant fails to pay the outstanding rent within the timeframe specified in the lease or as required by law, the landlord may then proceed with eviction actions. This might include forfeiture of the lease for breach of contract, depending on the terms of the lease agreement.
During the COVID-19 pandemic, there were temporary measures in place to protect businesses that could not pay their rent due to the impact of the pandemic. Landlords were encouraged to work out agreements with tenants rather than beginning eviction proceedings immediately. These measures included a moratorium on evictions and a code of conduct to guide negotiations between landlords and tenants regarding rent arrears caused by the pandemic.
Whilst these measures are no longer in place, it still serves as a good guide for negotiations.