Forfeiture of Mixed use Property


Commercial Property

When negotiation has failed and either CRAR (Commercial Rent Arrears Recovery) is not an option or insufficient goods exist to cover the arrears, the commercial landlord has been able to use the forfeiture clause in the lease to regain the property.

This is appropriate where the property is purely commercial but not on residential or mixed use properties.

Mixed use Property

We often get asked by commercial landlords

“My tenant has a shop with a flat above on the same lease and owes 2 months rent. What can you do for me?”

Forfeiture of Mixed use Property

We cannot do CRAR (Commercial Rent Arrears Recovery) as this can only be done under Tribunal Courts and Enforcement Act 2007 when the property is purely commercial.

Mixed use property never used to be a problem for forfeiture where the residential element such as the flat of the property can be accessed separately after the commercial side has been repossessed.

A few years ago this changed when in Pirabakaran v Patel 2006, the Court of Appeal clarified the position on whether commercial property can be re-entered when there are mixed use of a flat above a shop used by the tenant. A similar case was also brought under Tan –v- Sitkowski [2007] EWCA.

The position with residential property, has now limited the ability of a commercial landlord to regain possession without proceedings and getting a order for possession.

The Protection from Eviction Act 1977 states:

“Where any premises are let as a dwelling on a lease which is subject to a right of re-entry or forfeiture it shall not be lawful to enforce that right otherwise than by proceedings in the court while any person is lawfully residing in the premises or part of them.”

The case of Pirabakaran v Patel has clarified that where there is mixed commercial and residential use, a landlord or his bailiff will be in breach of the Protection from Eviction Act even by just peaceably re-entering the commercial part of the premises.

The Court of Appeal has interpreted the ‘let as a dwelling’ to mean ‘let wholly or partly as a dwelling’ and not as ‘let exclusively as a dwelling’.

The court has expressed a ruling that the tenants of mixed-use premises should not be treated any different from those who are solely residential. This also fits in with the right for private and family life under the Human Rights Act 1998.

So you cannot peaceably re-enter a mixed use property. A commercial landlord would need to forfeit the lease through court proceedings. To re-enter any part of the premises will be contrary to Protection from Eviction Act 1977.

We can help

Quality Bailiffs has over twenty five years of experience in the execution of warrants especially in the commercial rent sector.

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