A landlord may forfeit a commercial lease when the tenant is in arrears with the rent (usually by 21 days or more) under common law. The lease will be forfeited by peaceable re-entry of the premises, normally undertaken by certificated enforcement agents.
When the lease has been forfeited by peaceable re-entry, the tenant’s fixtures revert to the landlord and the tenant has no right to remove them.
However, it is a different matter when it comes to goods left behind in the premises. The tenant remains the legal owner, so the landlord could be sued by the tenant if he or she sells or disposes of their possessions.
It is unlikely that this would apply to perishable or disposable goods, although it is always wise to ensure there is a clause in the lease that permits the landlord to dispose of these kinds of goods.
Landlords in these circumstances become “involuntary bailees”. They can sell or dispose of goods that have been abandoned, but the goods have to have been physically abandoned and the owner must have intended to abandon them. Given that the lease was forfeited, this is unlikely.
Under Torts (Interference with Goods) Act 1977, the landlord must serve notices on the tenant to deal with possessions left behind in their premises. The first is notice that the goods need to be collected within a reasonable time period, and the second is notice that the landlord intends to sell the goods if they are not collected within that time period. In the case of commercial property, if the tenant’s address is not known, the landlord can place these notices prominently on the premises.
To avoid being sued by the tenant for the disposal of the goods, it is advisable to include clauses within the lease setting out what the landlord may do under these circumstances.
It is also best practice right after forfeiture to capture an inventory and photographic record of all the goods in situ, ideally taken by a third party. If the tenant does sue, they can only do so for the value of the goods, not for their replacement value (another good reason for a photographic record).
For advice on any of these issues email our debt recovery expert Richard Anderson on email@example.com or phone 01782 205000.