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When a tenant breaches the terms of his lease the landlord has a range of options that may be utilised in order to remedy the breach. Undoubtedly the most powerful weapon within any landlord’s armoury is that of forfeiture. A landlord can potentially use the breach to forfeit the lease and, subject to an application for relief from forfeiture, can grant a further lease at a premium.

Whilst forfeiture affords a useful mechanism for a landlord, the pitfalls that exist and surround an uncertain area of law create issues that require serious consideration and the exercise of a high degree of caution. A landlord who pursues a forfeiture claim erroneously exposes himself to claims for damages and costs through a possible wrongful forfeiture action brought by the tenant. Accordingly, of paramount importance is to analyse whether the landlord has waived their right to forfeiture prior to bringing the claim.

Waiver arises from the doctrine of election and has three key elements, being knowledge of the breach, an unequivocal recognition by the landlord that the lease remains in existence and, importantly, communication of the landlord’s recognition of the lease to the tenant. On a purely contractual basis the element of election that falls on the landlord is the decision whether to accept the repudiatory breach and treat the lease contract as terminated or, by way of affirmation of the breach, continue with the contract on the terms provided. Affirming the contract would not waive the landlord’s right to enforce a breach of covenant by the tenant by means other than forfeiture. For example a breach of lease for non-payment of rent could still be pursued by way of a debt claim in the County Court, or by way of distress if a commercial lease.

In terms of the aforementioned key elements of forfeiture, it is generally accepted that all must be present before waiver can be found to have occurred. A tenant must shift the burden of liability in providing evidence of the establishment of each point and landlords may not contract out of the application of waiver whether or not an express provision exists.

In considering whether, and when, a landlord has received knowledge of the breach a landlord must be mindful to consider that knowledge need not be direct and an employee encountering a breach during the course of their employment is sufficient to establish knowledge. Caselaw currently assists by confirming that a porter at a block of flats could impute knowledge of a breach on the landlord (Metropolitan Properties v Cordery (1980)) and that a landlord’s solicitor’s knowledge of a breach also imputes a breach onto the landlord by way of agency (Blackstone v Burnetts (West End) (1973)). Additionally, and perhaps confusingly, a landlord is not bound to have knowledge of a breach simply by having suspicion that a breach has occurred. Whilst this appears to give a landlord an unfettered excuse to ignore any information that is not directly informing him of a breach, he must do so at his peril. If a landlord has suspicion of a breach based on reasonable grounds but fails to investigate further this can result in sufficient knowledge for waiver to arise.

The condition of unequivocal recognition of the existence of the lease is a legally complex matter that is littered with case law and the subjective consideration of whether the recognition was indeed an unequivocal recognition. Most commonly the landlord can risk such recognition of the lease by accepting rent – a tempting source of income for a landlord - particularly when the act of forfeiture can take a number of months to conclude without further income.

Acceptance of rent, per se, does not automatically constitute waiver, however. The key consideration is the date on which the forfeiture arose and whether any rent was accepted for the period after the date of forfeiture. Importantly, acceptance of rent that has fallen due (and was demanded) prior to the date of the forfeiture does not amount to waiver. However, the demand or acceptance of rent by error or without prejudice to any forfeiture claim will amount to clear constitiution of waiver. A landlord must also be aware of payments being made into his, or his agent’s, bank account as a failure to reject a tenant’s payment within a reasonable time amounts to a recognition of the existence of the lease.

Communicating the act of waiver to the tenant is imperative for a tenant to effectively prove waiver and any act, consideration or statement has long been considered unable to waive a landlord’s right to forfeit unless the communication has been served on, and received by, the tenant (Blackstone v Burnetts (West End) (1973) and (Dendy v Nicholson (1858)).

A further consideration is to the nature of the breach, specifically whether the breach is ‘once-and for-all’ or a continuing breach. Breaches of lease for non-payment of rent or service charges, as examples, amount to ‘once and for all breaches’ and waiver would operate to extinguish the landlord’s right to forfeiture altogether. A continuing breach, such as disrepair, would continue to perpetuate the right of forfeiture and, accordingly, waiver would essentially arise on a daily basis thereby rendering waiver a far lesser issue.

A final consideration in relation to waiver is the period in which it can operate. The landlord’s knowledge of the breach creates the election that can be waived and this continues until a claim for possession is issued specifying forfeiture as the grounds for possession (see Bilson v Residential Apartments (1992)).

In conclusion, the array of issues pervasive to waiver are complex and any landlord must analyse their case adequately and cautiously prior to commencing an action for forfeiture as the potential risks are considerable.

The array of issues pervasive to waiver are complex and any landlord must analyse their case adequately and cautiously prior to commencing an action for forfeiture as the potential risks are considerable.

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