Service of s.146 Notices: Do not move too soon

Do not move too soon in forfeiture proceedings

The background

In Toms v Ruberry [2019], the leaseholder of a pub lease was engaged in a dispute with the freeholder. It was argued by the freeholder that the leaseholder had not complied with its repairing obligations under the lease, which allowed the freeholder to enter the premises and forfeit the lease in the event of the leaseholder’s default. Further background details to this case are contained in our earlier report.

Two appeals have now concluded and the Court of Appeal has determined the position.

The decision

The Court of Appeal dismissed the appeal, finding that the right of re-entry must have arisen before service of a s.146 Notice.

Although s.146(1) of the Law of Property Act 1925 does not state a time that the s.146 Notice should be served, the Court of Appeal found that this could only be once a breach of covenant or other condition has occurred to trigger the right of re-entry.

The s.146 Notice should specify the nature of the breach and, where capable, require the tenant to remedy the breach. The Notice should only be served where the tenant has failed to remedy the breach in a reasonable timeframe; considering these points, it is therefore a logical conclusion that s.146 Notices can only be served when the relevant breach has occurred.

Advice and action for landlords

The appeals confirm the previous decision that there must be absolute certainty at the time a s.146 Notice is served that a right of re-entry exists.

Landlords are warned against acting prematurely when considering forfeiture action.