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How to Terminate A Commercial Lease for Non-Payment of Rent


January 22, 2019 ( Newswire) When tenants fail to pay their rent, landlords usually are left with no choice but to act to curb the damage to their business. However, a landlord cannot just evict a tenant. There are specific procedures that you must follow, or risk legal ramifications due to practical or technical flaws over the handling of the contract breach.

There are state-specific laws that cover commercial leases and outline the procedure for handling breaches.

Terms Used

1. Forfeiture 

If there is nonpayment of rent by the tenant, the landlord can declare the lease and rights of the tenants, forfeited by the breach. The tenant is going to be liable for the damages incurred by the landlords, including unpaid rent by another tenant, advertising costs, forfeiture costs, damage to the premises, and more.

2. Re-entry

You need to determine how the tenant has breached the lease contract, which could be either a financial breach like non-payment of rent and non-financial breach such as failing to maintain the property in a repair state.

3. Offer the Tenant Written Notice to Correct the Breach

In the notice, indicate the specifics of the breach and ask the tenant to correct the violation within a reasonable period, which depends on the capacity of the offense. You also require indicating the things to be done to remedy the breach. In case compensation can be paid, specify any payment that the tenant might need to pay.

You will be entitled to forfeit or re-enter the lease if the tenant fails to obey the notice within a reasonable period. Simply put, if the tenant fails to correct the breach in the specified time, there can be termination of the lease through litigation, re-entry, or notice.

Personal Property at Premises

According to common law, the tenant possesses the right to enter the premises for the limited purpose of repossessing their property. Therefore, landlords need to let tenants return to the premises to pick their things. In case the tenant fails to collect their goods, the landlord can put the items in storage and eventually sell them according to the Landlord and Tenant Act 1958.

Reason for Litigation

The court system experiences numerous court battles about the validity of lease terminations and legality of notices to remedy. Therefore, landlords need to ensure their warnings are valid. It is essential that you correctly complete the form. For instance, the notice can be invalid if there is inaccuracy in circumstances of the breach or if the form has technical errors. If this happens, the landlord will need to restart proceedings by issuing a new notice.

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