Forfeiture is an order of court terminating the interest of the tenant for various reasons i.e. an act by which the court allows the landlord to retake the premises and thus part an end to the relationship. However, before a landlord can take advantage of this mode of terminating, he must have inserted in the tenancy agreement or leasehold agreement, a forfeiture clause.
Forfeiture clause consist of the list of DO’s and DONT’s (i.e. a list of things or act which the tenant shall do or must not do) are either conditions or covenants-community expressed thus; “the tenant hereby covenant not to carry out any structural or boundary adjustment without the consent of the landlord”. Apart from these covenants, a forfeiture clause to the effect that where the tenant fails to observe any of these covenants, it shall be lawful for the landlord to retake or repossess the property. It is this type of provision that is called forfeiture clause. Therefore, the breach of covenant to which a forfeiture clause is applicable renders the lease voidable at the instance of the landlord. Where there is absence of such forfeiture clause, the landlord would only have the right to maintain an action for damages or for a restriction to restrain breach.
Unlike covenant, if the tenant’s obligation are worded as conditions e.g. if the lease is granted ‘upon condition that’ or ‘provided that’ certain things are done or not done. The lease will be forfeiture on breach of condition even if there’s no forfeiture clause. Consequently, the implication of the tenant’s obligation being worded as conditions means that the continuance of the lease has been made conditional upon the tenant performing these obligations. Upon breach of one of them, the lease becomes void forthwith, without need for re-entry or retaking the land by the landlord.
Non-payment of rent by the tenant will give the landlord the right to re-enter the leased premises. However, the landlord’s right to re-enter for non-payment arises only where there is an express proviso that effect in the lease or in the tenancy agreement, e.g. a proviso giving the landlord the right of entry if the rent or any part thereof shall be in arrears and unpaid for 30days after it has been due.
When the tenant has committed a breach in respect of any of the above grants giving rise to a right of forfeiture, the landlord may immediately show an intention he is treating the lease as forfeited. He may subsequently loose the right to proceed with the forfeiture if he waives the breach. Waiver may be expressed or implied. It would be implied if:
- The landlord has knowledge of act of omission of the tenant giving rise to the right of tort.
- The landlord does some unequivocal act of recognizing the continued existence of the lease. A waiver will normally be implied where to landlord with knowledge of the breach sues for or accept rent falling due after the breach, whether due before or after the breach.
However, note that neither the acceptance nor demand for rent or suing for rent will amount to a waiver if done after the landlord has shown his final decision to treat the lease as forfeited by commencing an action for possession. Note that the waiver of a covenant or condition external only to the particular breach in question and does not operate as a general waiver of all future breaches. See section 162 of the PCL. Note also that waiver or forfeiture is no bar to an action for damages.
How right of forfeiture may be enforced?
Where a landlord is entitled to forfeit the interest of his tenant, he may do so in the following two respects:
- By making a peaceful entry unto the tenement, or
- By commencing an action in a court of law for possession. The second option is better to avert criminal consequences hence a unit of possession must be served on the tenant by the landlord.
The conditions under which the forfeiture can be enforced depend upon whether the right arises from non-payment of rent or from breach of any other provision or covenant; forfeiture for non-payment of rent-where the right to forfeit the lease for non-payment of rent has accrued, he cannot exercise it unless he has made a formal demand for it. The exemption here is where such formal demand has been expressly exempted in the agreement.
Formal demand: to make a formal demand, the landlord or his authorised agent must demand:
- The exact rent due
- On the day when the rent falls due
- At the place specified if any, or at the tenement itself.
- At such convenient hour before sun set as will give time to count out the money.
Exemption from formal demand: to avoid the technicalities of a formal demand, every well drawn lease will provide that the lease may be forfeited if the rent in a specified number of days is in arrears “whether formally demanded or not” these words will exempt the landlord from making a formal demand in any action for forfeiture for non-payment of rent, if and only if, half a year’s rent is in arrears.
A term expressed to effect at a future date is a reversionary lease or a lease in reversion. It is granted to commence after the expiration or determination of an existing lease. If did not at common Law create any term or estate until entry under the lease after the appointed time for its commencement.
