Q&As

Can a landlord forfeit a lease by peaceable re-entry if the tenant is bankrupt, vacated the premises some time ago, and has substantial rent arrears (the lease allows for forfeiture if the tenant is bankrupt)? What are the risks of the landlord doing this? Also, does liability under an authorised guarantee agreement (AGA) cease on surrender of the lease (express or implied) or forfeiture for bankruptcy, or does this come down to the wording used in the AGA?

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Produced in partnership with Chris Bryden of 4 King’s Bench Walk
Published on LexisPSL on 17/10/2019

The following Property Disputes Q&A produced in partnership with Chris Bryden of 4 King’s Bench Walk provides comprehensive and up to date legal information covering:

  • Can a landlord forfeit a lease by peaceable re-entry if the tenant is bankrupt, vacated the premises some time ago, and has substantial rent arrears (the lease allows for forfeiture if the tenant is bankrupt)? What are the risks of the landlord doing this? Also, does liability under an authorised guarantee agreement (AGA) cease on surrender of the lease (express or implied) or forfeiture for bankruptcy, or does this come down to the wording used in the AGA?

A tenant who fails to pay the rent will ordinarily find that the landlord forfeits the lease as a result, assuming there is a clause in the lease allowing re-entry in such circumstances. Where that tenant has been adjudged bankrupt a trustee in bankruptcy will be appointed and the effect of the bankruptcy order is to vest the property of the bankrupt in the trustee upon their appointment: section 306 of the Insolvency Act 1986 (IA 1986). The vesting is automatic and takes place without conveyance or assignment so is not of itself a breach of any provision prohibiting this. In this scenario, the lease provides that bankruptcy gives rise to the right to forfeit.

The making of a bankruptcy order means that a creditor must obtain the permission of the court to bring or pursue an action against the estate of the bankrupt: IA 1986, s 285. It appears th

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