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Under s170 of the 2002 Act (which amends s81 of the Housing Act 1996), once it is finally determined that the amount of the service charge or administration charge is payable by the leaseholder by a) the FTT at the time, b) on appeal, or c) by an arbitral tribunal (in proceedings pursuant to a post-dispute arbitration agreement), or c) the leaseholder agrees it is payable only then can the forfeiture notice be served.

The s146 Notice will specify the following:

  1. The breach complained of;
  2. The requirement for it to be remedied (if capable);
  3. The amount of compensation to be paid (unless the landlord waives this).

The Notice can only be served after 14 days from the final determination and must also be served on anyone else with an interest in the property. This is because forfeiture of a lease involves the destruction of all rights that feed off it, so sub-lessees, mortgagees, assignees and occupiers all stand to lose their interests in the premises.

The freeholder must allow a reasonable period of time (usually 3 months) for compliance and if the breach is remedied then forfeiture is not applicable. If the breach is not remedied within a reasonable time the court has the discretion to grant relief to allow more time for remedy, provided the leaseholder has applied for it. Even if it is granted then the freeholder can continue to proceed with enforcing forfeiture at any time before possession has actually been taken.

Affected parties can also apply for relief against forfeiture and the Court has a broad power to grant it. Typically, a sub-tenant will have to make good his landlord’s defaults and to enter into a new lease with the head landlord that contains the same duties as his landlord owed: this can often involve taking on new rent and repairing duties if the sub-tenant wishes to remain in the premises.

Having said that, the freeholder will usually seek an order that they are entitled to vacant possession of the property because where the property is lawfully occupied as a dwelling, the premises cannot be re-entered without a court order under the Protection from Eviction Act 1977, applicable to both owner-occupiers and subtenants.

 

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