How to obtain possession of commercial property from a difficult tenant
One of the most difficult aspects of managing commercial property is obtaining possession from a tenant. This might be because your tenant is in breach of their lease, or because they refuse to leave the property. In either case, resolving the situation can be a fraught and messy process, potentially involving legal action.
While negotiation can sometimes yield positive outcomes, it may be necessary to go to Court to pursue a possession order. Below we’ll explore the process of obtaining possession of commercial property, including when it is necessary, how much it might cost, and what the alternatives are when trying to reclaim your property.
What is commercial property?
In legal terms, a commercial property refers to real estate, including land and buildings that is specifically used for business activities or generating income, and not for residential accommodation. Examples of commercial properties include:
- Retail
- Offices
- Hospitality (e.g. hotels and restaurants)
- Healthcare facilities
- Industrial (e.g. warehouses)
Different types of commercial properties will require specific planning permissions. Each property will have a designated use class, with most commercial properties falling under Class E - Commercial, Business and Service.
This class can only be changed by applying for permission from your local planning authority. Any tenant wishing to make any alterations to your commercial property will typically require your consent under contract, even if these changes are cosmetic rather than structural.
Other common terms of a commercial property lease include the type of the agreement, rental value and currency, payment agreement, and timescale. There may also be an optional break clause allowing either party to serve notice without incurring any penalty.
What is a possession order?
A possession order is an order granted by the Court that enables a landlord to take back physical possession of a commercial property from a tenant. This may be for several reasons:
- The lease has expired and the tenant has refused to leave;
- Where the tenant has persistently breached the terms of the lease, such as non-payment of rent; or
- To evict trespassers or squatters on your commercial premises.
If you are successful in obtaining a possession order, the Court will specify a date by which your tenant is required to vacate the premises. If you serve this to the tenant and they then fail to leave the property by the date specified in the possession order, you may then need to return to the court for a writ of possession, or warrant. Upon serving this, High Court Enforcement Officers (HCEOs) will then remove the tenant/s from the premises.
When might you need a possession order? / When can you apply for a possession order?
Before applying to the Court for a possession order, it may be worth exploring other options. Like any Court process, a claim for possession can be costly, time consuming and stressful. You may find that there are understandable and legitimate reasons for a tenant failing to leave, such as difficulties with financing or a lack of alternative premises, and that opening a dialogue will help you find common ground.
Depending on your relationship with the tenant and their willingness to engage in dialogue, you may be able to resolve matters through negotiations or mediation. While this may still require the involvement of a third party, it tends to be both quicker and much more cost effective, and can result in lost rental income being recouped as well as the resolution of the occupancy issue.
What are the alternatives to a possession order?
Another option is that of forfeiture of the lease by peaceable re-entry. This is a legal mechanism which can only be used if there is a provision within the lease that permits it. It involves re-entering the property, changing the locks, and securing the property to prevent the tenant from regaining access.
While peaceable re-entry is a useful tool to recover possession, it can only be used if there is no resistance from the tenant, and they are not physically in the property. Using excessive force or violence can result in landlords committing a criminal offence, meaning that it is usually only successful when the property is empty, though this is more likely for a commercial property than a residential one.
If the tenant refuses to engage, a Court order for possession may be the quickest way to remove them. However, you must ensure that you have followed the correct procedures outlined in the lease before issuing any Court proceedings. This makes it important that you seek legal advice as early as possible from a commercial litigation lawyer to avoid being in breach yourself, and wasting time and money on a failed application.
For example, if the tenant is in breach of the terms of the lease, other than for non-payment of rent, you must first serve a section 146 notice on the tenant, and give them a reasonable time to rectify the breach before applying to the Court for possession. We can help you to understand if a possession order is required, or if there is another option that is more suitable.
How to prepare for a possession order
The most important step before applying for possession is ensuring your documents are in order. These will include:
- A copy of the lease agreement;
- Proof of ownership or title to the premises;
- Evidence of the breach (e.g. rent arrears); and
- Any relevant correspondence regarding the breaches.
Ample documentation is key not only to successfully applying for a possession order, but also expediting the process. Failure to produce the correct documentation, or supplying documentation which contains mistakes or lacks key details, could slow down or even derail your attempt to obtain possession from the tenant.
How long does possession take? / How much does a possession order cost?
The time frame for possession can vary, but in general it may take as little as six weeks in straightforward cases, or several months in more complex claims. The timescale for possession very much depends on the Court that you use and how busy they are. The general backlog of cases means that possession orders have taken longer in recent years.
It is also possible to obtain ‘accelerated possession’ where the court deals with your application on paper, but this is only suitable where the tenant is not disputing the claim, and all you want is possession. It is typically associated with residential property, and is most commonly used in straightforward cases, for example where the lease term has expired but the tenant has refused to leave.
If you have obtained a possession order and the tenant will not leave, you can apply to the court for a warrant of possession. This allows county court bailiffs or High Court Enforcement Officers to enter and physically remove the tenant from the premises on your behalf.
How can Parfitt Cresswell help?
As a commercial landlord, managing cashflow and maintaining the state of your property is key to your investment. When it comes to evicting a tenant, a possession order can be a very effective way of recovering possession of your commercial property. If you take the right steps at the right time, then the process can be quite straightforward.
Overlooking the rules, missing deadlines, or even simple errors in paperwork can cause issues, lead to delay and additional costs. Acting quickly, getting your papers in order, and enlisting the help of a commercial property litigation solicitor can make all the difference.
Our specialist solicitors will work with you to make sure you can recover your premises painlessly and efficiently. Get in touch with us today to discuss your case, and start on the road to reclaiming your commercial property.
