Commercial Property Dispute Solicitors
A breach of a commercial lease by a tenant can quickly become a serious legal and financial issue. Commercial leases are binding contracts, often running for many years, and a failure to comply with their terms can place both landlords and tenants at risk of significant loss. Common problems include unpaid rent, disrepair, unauthorised use of premises, or breaches of alienation clauses.
At Bonallack & Bishop, our specialist commercial commercial property dispute solicitors advise both landlords and tenants on alleged breaches of commercial leases. We focus on practical solutions, whether that means enforcing lease terms, defending enforcement action, or negotiating an outcome that preserves a valuable business relationship.
Looking for specialist legal advice from Solicitors who really understand Commercial Lease Disputes? Call us on FREEPHONE 0800 1404544. Initial legal advice on the phone is always FREE.
What Is the Most Common Cause for Breach of a Commercial Lease?
The most common cause of breach of business lease by a tenant is fairly basic – simple non-payment of rent. However, disputes frequently arise from other obligations that tenants may overlook or misunderstand.
Typical causes include:
- Rent arrears, including base rent, service charges, and insurance rent.
- Failure to comply with repair obligations, particularly in full repairing and insuring leases.
- Carrying out alterations without landlord consent.
- Using the premises for an unauthorised purpose.
- Subletting or assigning the lease without permission.
Example scenario:
A retail tenant experiences reduced footfall and begins paying rent late. Over time, arrears build up. The landlord must decide whether to negotiate a payment plan, use CRAR, or consider forfeiture. The tenant, meanwhile, may still be trading successfully but risks losing the premises if the situation is not addressed quickly.
Landlord’s Remedies for Breach of a Commercial Lease
Landlords have several remedies available when a tenant breaches a lease. The correct option depends on the nature of the breach, the wording of the lease, and the landlord’s commercial objectives.
Common remedies include:
- Forfeiture of the lease, either by court proceedings or peaceable re-entry.
Click to read more about forfeiture of a commercial lease - Commercial Rent Arrears Recovery (CRAR).
Click to read more about Commercial Rent Arrears Recovery - Court claims for rent arrears or damages.
- Injunctions requiring the tenant to comply with lease obligations.
- Claims against guarantors or former tenants under authorised guarantee agreements.
Case-style example:
A landlord discovers that a tenant has sublet part of the premises without consent. The landlord may choose to serve a Section 146 notice requiring the breach of the lease to be remedied. Alternatively, if the breach continues, forfeiture may be pursued. Each step must be carefully managed to avoid waiving rights.
What Is Commercial Rent Arrears Recovery (CRAR)?
CRAR is a statutory process allowing landlords to recover unpaid rent by taking control of a tenant’s goods and selling them to clear arrears.
Important points include:
- CRAR applies only to commercial premises – not residential.
- It can recover rent only, not service charges or insurance.
- A minimum level of arrears must exist before CRAR can be used.
- Notice must be served before enforcement agents attend.
Practical example of CRAR in action:
A warehouse tenant falls two months behind on rent. The landlord uses CRAR to recover the arrears by instructing enforcement agents. However, by doing so, the landlord limits its ability to forfeit the lease for those arrears later. Early advice ensures the landlord selects the most effective remedy.
Tenant’s Rights and Relief
Tenants accused of breach of a commercial lease agreement are entitled to protection under property and contract law. Many breaches can be remedied, and even where forfeiture has begun, tenants may still have options.
Tenants may be able to:
- Remedy the breach on any commercial lease within a reasonable time.
- Apply to court for relief from forfeiture.
- Challenge invalid notices or enforcement action.
- Dispute the existence or seriousness of the breach.
Here is an example of how that might work:
A tenant receives notice that the landlord intends to forfeit due to disrepair. The tenant commissions a surveyor’s report showing the issues are minor and promptly completes the works. Legal intervention prevents forfeiture and preserves the lease.
Breach of Your Commercial Lease? What to Do If You’re a Tenant
If you are a tenant facing allegations of breach, speed is critical.
You should:
- Review your lease and any correspondence carefully.
- Identify whether the breach you have committed is capable of remedy.
- Avoid making rent payments or admissions without legal advice if forfeiture is threatened.
- Seek advice before responding to a Section 146 notice or CRAR notice.
In many cases, a negotiated solution can avoid court proceedings and business disruption.
What Is a Section 146 Notice?
A Section 146 notice is required before forfeiture for most non-rent breaches of a commercial lease.
It must:
- Clearly identify the breach.
- Require the tenant to remedy the breach if possible.
- Request compensation where appropriate.
Failure to serve a valid notice will usually make forfeiture unlawful.
For Landlords – The Importance of Getting Your Section 146 Notice Right
A defective Section 146 notice can undermine a landlord’s entire enforcement strategy.
For landlords, mistakes in getting the paperwork right may:
- Invalidate forfeiture.
- Delay enforcement and increase costs.
- Expose them to claims from the tenant.
For tenants, identifying errors in a notice can provide leverage to negotiate additional time or favourable terms.
Does the Renters Reform Act Affect Commercial Leases?
No, the Renters Reform Act focuses on residential tenancies and does not apply to commercial leases.
However:
- Commercial leases remain governed by existing property law.
- Forfeiture, CRAR, and Section 146 procedures are unchanged.
- Mixed-use properties may require careful analysis.
Professional advice is essential where a property has both residential and commercial elements.
How Our Commercial Property Dispute Solicitors Can Help
We advise landlords and tenants at every stage of a commercial lease dispute, including:
- Early advice on alleged breaches.
- Enforcement or defence of forfeiture.
- Drafting and reviewing Section 146 notices.
- Challenging or using CRAR.
- Negotiating settlements and payment plans.
- Court representation where required.
Our aim is always to achieve a practical outcome aligned with our clients’ commercial objectives.
Breach of Commercial Lease by Tenants – Why Early Legal Advice Matters
Commercial lease disputes escalate quickly, and early legal advice can make a decisive difference. Whether you are a landlord seeking to enforce your rights or a tenant trying to protect your business, taking advice at the outset often prevents costly mistakes, unnecessary litigation, and loss of leverage.
Our specialist commercial property dispute solicitors can assess your position, explain your options in plain English, and take swift action where needed. In many cases, early intervention following breach of a commercial lease allows disputes to be resolved through negotiation or strategic action before court proceedings become unavoidable.
If you are facing a potential breach of a commercial lease, or are considering enforcement action, we recommend speaking to our team as soon as possible.
FAQ
Can a landlord forfeit a commercial lease for any breach?
Not always. For most non-rent breaches, a valid Section 146 notice must be served first.
Can a tenant stop forfeiture after it has started?
In many cases, yes. Tenants may apply for relief from forfeiture, even after court action.
Does CRAR apply to service charges?
No. CRAR can only be used to recover pure rent, not service charges or insurance rent.
Can a landlord accept rent after a breach?
Accepting rent may waive the right to forfeit, depending on the circumstances.
Do commercial lease disputes always go to court?
No. Many disputes can be resolved through negotiation or alternative dispute resolution with early legal advice.