There are times when retailers and commercial companies are not able to make a profit. Worse, they may be losing money. It is the nature of business that some companies don’t earn enough that they can go bankrupt. When a company is facing hard times, some expenses may take a back seat—either the employee wages get delayed, or the company stops paying its suppliers and its property lease. When this happens, the landlord or commercial space owner may need to file a case for a forfeiture action against the commercial lease if the tenant stops paying rent.
The contract is the main document that covers relationships and obligations between landlord and tenant. All the actions are prescribed in the contract. These include the tenant payment schedule as well as the responsibilities of the tenant. It also details what happens when the tenant is late in his payments. Among other things, it makes clear that there is a prescribed course of action for late or missed payments.
The lease contract revolves around the payment of rent as a contractual obligation. Renting a commercial space is a business transaction. The landlord agrees to rent the space in exchange for rent. When the rent is not paid, the landlord is also contractually obligated to start procedures, which would require immediate payment. If the tenant is not able to pay, then the landlord sends a letter informing the tenant of late payment. This procedure is also aligned with possible legal proceedings if the tenant is still not able to pay the rent. There are other circumstances when the landlord may want to start a forfeiture proceeding. Non-payment of rent is one kind of breach of contract. There are others, depending on what the contract says. These include any unauthorised construction or sub-lease or if the tenant has flammable materials stored on site. If the landlord has proof of the above, then he can proceed with efforts to evict the tenant.
A solicitor is not required in the initial eviction steps. The landlord can send the first demand letter informing the tenant that he is possibly in breach of contract. It is important that he should keep copies of all the correspondence and that the letters are signed when received by the tenant. The letters in effect ask the tenant to comply with the contract’s terms and conditions.
If the tenant has problems with his rent, this can be remedied by negotiating with the landlord. It is possible to stay the forfeiture by signing a promissory note. If accepted by the landlord, then the note becomes part of the contract. The forfeiture proceeding will continue, however, if the tenant is not able to make good on the promissory note.
While the letters and forfeiture procedures are being followed for other reasons for a breach of contract, it is important for the landlord not to accept any payment after the demand letter has been sent. Accepting rent during this period implies that the landlord accepts the situation, and this may hinder any forfeiture action. In this case, the landlord may need advice from lawyers on how to proceed with evicting the tenant. At this point, the tenant may also already have representation to counter any forfeiture proceeding.
Forfeiture is a legal process that follows procedures laid down in contracts. These are understood by both parties to be binding, and they have legal recourse also written down in the contract. In addition, the parties can escalate their concerns and grievance to a court of law. For landlords who are determined to proceed with forfeiture, they need to have a lawyer to help them with the procedures.