In commercial property, a tenant breaches the terms of the lease if they do anything that is expressly forbidden by the agreement, including subletting without authorization or making unauthorised changes. Another breach of a covenant is not making rent payments. Waiver in a landlord-tenant relationship refers to the landlord’s right to reclaim the lease in the event that the leaseholder breaches a covenant. By treating the lease as if it were still in effect and, for example, by requesting additional ground rent or service charges even after becoming aware of the breach, a landlord may unintentionally waive, or give up, his right to forfeit on certain breaches. In this article, Waiver Of Breach Of Lease Covenant, we take a look at the mechanism and process involved.
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How does the waiver function?
The landlord must decide whether to treat the lease as terminated or as continuing, in spite of the breach, in situations where there has been a breach that allows the landlord to forfeit.
The landlord may forfeit the lease if, by his actions, he believes that the tenant’s lease is still in effect. This type of action is referred to as waiver, which is the landlord’s apparent or actual decision to treat the lease as perpetual.
For a waiver to avoid forfeiture, it needs to include each of the following:
- Knowledge of the breach; AND
- Unambiguous acknowledgement that the lease will remain in effect; AND
- Notifying the tenant of the landlord’s clear acknowledgement.
Knowledge of the breach
The breach must be disclosed to the landlord i.e. he or she must know of the breach. The fundamental details that legally constitute a covenant breach must be disclosed to the landlord. The landlord is required to investigate and determine the real situation if there are good reasons to believe there has been a breach. It will be presumed that he has the necessary knowledge if he doesn’t comply. To the extent of their authority, knowledge obtained by a landlord’s employee or agent may be adequate to waive the right to forfeit.
The tenant bears the burden of demonstrating that the landlord was aware of the breach and has thereby relinquished the right to forfeit.
Unambiguous acknowledgement
It is an objective test. If the landlord clearly indicates to the tenant through his words or actions that he has decided to accept the tenant’s lease as continuing, then the landlord has automatically given up his right to forfeit the lease.
The court must consider objectively whether in all the circumstances the act relied on as constituting waiver is so unequivocal that when considered objectively it could only be regarded as being consistent with the lease continuing in order to determine whether the tenant’s claimed act amounts to waiver.
Demanding or accepting rent, insisting on the payment of service fees, utilising the Commercial Rent Arrears Recovery process, serving a Notice to Quit or a notice to repair and enter, and asking for a property inspection are a few instances of actions that could be considered waivers. It should be remembered that each case is unique and should be considered on its own merits.
Notifying the tenant of your clear intentions
A deed or declaration that is not disclosed to the tenant does not constitute a choice to forego the forfeiture right. In cases where the waiver is based on the sending of a document, for instance, the waiver won’t take effect until the document is received. Once forfeiture proceedings are initiated or re-entry is exercised, there is no waiver.
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We have a proven track record of helping clients deal with breaches of lease covenants and waivers. We will guide you through the process and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
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It is important for you to be well informed about the issues and possible implications of a breach of lease covenant and waivers. However, expert legal support is crucial in terms of ensuring a positive outcome to your case.
To speak to our Commercial Property solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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