Relief Against Forfeiture
Under section 261 of the Property Law Act 2007 (“PLA”), where a party has received notice of refusal to renew a lease, they may apply to the Court for relief under section 264 of the PLA. Applications must be made within 3 months of the lessee receiving notice of the refusal to renew the lease.
Section 264 of the PLA allows the Court to make an order which extends or renews the lease. The Court may also require the lessor to enter into a new lease with the lessee. Expenses, damages and compensation may also be awarded by the Court in respect of the above orders.
If the lessor has already leased the premises to someone else, or made a disposition which an order under section 264 would prejudice, the Court may still make an order under section 264; however, it may also choose to cancel or postpone the new estate or interest belonging to the third party, and assess and order damages or compensation. This may be payable by either the lessor or the lessee individually, or by them both jointly.
When considering whether to grant a renewal of the lease, the Court will take 7 factors into account:
- Reasons for the failure to give notice – e.g. whether the failure to renew was inadvertent;
- Whether the cause of the default was due to any action of the landlord;
- The lessee’s conduct, in particular whether it has complied with all conditions/covenants and has been a good tenant;
- The prejudice to the lessee if the relief is not granted;
- The prejudice to the lessor if the relief is not granted;
- The lessor’s motivation for the refusal to renew and understanding of the lessee’s intentions; and
- The interests of third parties and how they might be affected by any order.
This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation.
Contact Kris Morrison at krismorrison@parryfield.com
