Waiver of the right to forfeit

A waiver of the right to forfeit occurs when a landlord, knowingly or unknowingly, takes actions that acknowledge the continuation of a lease after becoming aware of a tenant’s breach.

This can significantly impact the landlord’s ability to forfeit the lease in the future, making it crucial for landlords to understand how a waiver can occur and how to avoid it. Waiving the right to forfeit can be highly detrimental for landlords, yet it is an area that is often misunderstood and fraught with the risk of unintended waivers, leading to significant exposure.

The impact of waiving the right to forfeit varies depending on the type of breach involved. For continuing breaches, waiving the right has less severe consequences, as the right to forfeit may arise again with each new occurrence of the breach. However, waiving a ‘once and for all’ breach means the opportunity to forfeit the lease is permanently lost, with no further chance to exercise that right.

What is a waiver of the right to forfeit?

A waiver of the right to forfeit happens when a landlord acts in a way that suggests the lease is still in effect, despite being aware of a breach by the tenant that could otherwise justify forfeiture. Once the right to forfeit is waived, the landlord cannot later use the same breach as grounds for terminating the lease.

Common causes of waiver

There are several actions that can lead to a waiver of the right to forfeit, including but not limited to:

• Acceptance of rent: If a landlord accepts rent from the tenant after becoming aware of a breach, this is the most common form of waiver. By accepting rent, the landlord is acknowledging that the lease is still valid.
• Communication with the tenant: Engaging in correspondence or other communications that treat the lease as continuing—such as discussing future rent payments, lease renewals, or other lease obligations—can also constitute a waiver.
• Actions inconsistent with forfeiture: Any action that contradicts the intention to forfeit the lease, such as granting consent for alterations or allowing the tenant to remain in occupation without objection, may be seen as a waiver of the right to forfeit.

How to avoid waiving the right to forfeit

Landlords who wish to preserve their right to forfeit should always seek legal advice, but a few initial steps that can be taken to preserve the right to forfeit are:

• Seek legal advice: Before taking any action after discovering a breach, landlords should seek legal advice to understand their options and avoid inadvertently waiving their right to forfeit.
• Withhold rent acceptance: Avoid accepting rent or any part of it after becoming aware of a breach. If rent is received, it should be returned immediately with an explanation that accepting it could waive the right to forfeit.
• Issue a section 146 notice: For breaches other than non-payment of rent, promptly serving a Section 146 notice under the Law of Property Act 1925 can help to protect the landlord’s position. This notice must specify the breach, require the tenant to remedy it if possible, and demand compensation.
• Act consistently: Ensure that all actions and communications with the tenant are consistent with the intention to forfeit the lease if the breach is not remedied.