Taking possession – kicking the door in

In circumstances where a tenant has been in breach of their obligations under a lease, it can often be a very difficult decision for a landlord whether or not to take posession of their premises. Normally there have been lengthy discussions between the landlord/managing agent and tenant regarding breaches of the lease often involving rental arrears. It can get to the stage where the landlord has simply had enough and would rather have the premises vacant than put up with a troublesome tenant, on other occasions the landlord will put up with a troublesome tenant until they have a real prospect of re-letting the premises to a new tenant.

If a landlord makes a decision to terminate a lease, then there are basically three alternatives:

1. Physical re-entry of the premises
2. Re-entry by notice
3. Issuing proceedings for possession

Outlined below are the advantages and disadvantages of each method of obtaining possession.

Physical re-entry

Taking back possession without notice, normally by changing the locks.

Advantages

• Quick
• Relatively inexpensive
• Provides certainty as to the date when vacant possession can be obtained

Disadvantages

• If the entry is unlawful it can give the tenant a damages claim
• Courts and tribunals are generally willing to grant an injunction to restrain wrongful re-entry if the tenant can establish an arguable defence
• It is unknown whether the tenant will re-take possession which could lead to physical conflict

Entry by Notice

Notices are put on the premises prior to taking possession.

Advantages

• No security risk
• Risk of damages is reduced
• Giving notice is inexpensive

Disadvantages

• Does not provide immediate possession
• If the tenant does not go willingly it still may require an application to court

Re-entry by Court Proceedings

Getting a current order for possession of the property

Advantages

• No security risk
• Risk of damages is reduced

Disadvantages

• Usually more expensive to re-enter by issuing proceeding than by ordinary notice
• Faster than serving notice and issuing proceedings

If the landlord considers that there are reasonably strong grounds to terminate a lease,  then the best way to obtain possession is by physical re-entry. This can often result in quite serious conflict when the tenant arrives the next morning to find the keys don’t work or there is some physical barrier to entry. It is quite common in these circumstances that the tenant re-takes possession of the property leaving the landlord with the difficulty of again having to re-take possession. There have also been circumstances where the tenant has re-taken possession of the premises and the landlord has then made the premises physically incapable of being occupied by removing doors and even removing powerboards. Quite often when there has been a physical re-entry of the premises it is necessary to place security guards at the premises so that the tenant does not re-take possession and there can be significant costs in doing do. This can sometimes mean that the tenant will then go directly to the managing agent or the owner to complain about the treatment that they have received.

If a landlord by itself, or with the help of a managing agent, takes possession of premises, we recomend that there should be some independent witnesses to this action. The tenant, confronted with losing possession of their business/property will often claim that the landlord or managing agent has stolen some assets (ie. money in cash from the top drawer or a brand new Rolex!!). In circumstances where a landlord makes a decision to take possesion of leased premises, we strongly recommend that the landlord or agent seeks legal advice.

For further information please contact one of our Commercial Property lawyers.

Author:John Turnbull