Coronavirus and the Impact on Possession Proceedings and Forfeiture Proceedings

The Coronavirus has had a major impact on civil court proceedings, whilst some urgent hearings are taking place most are delayed for the time being.  It is not just hearings which are delayed but there has been a suspension of new possession proceedings for property and new forfeiture proceedings for business tenancies along with other measures. 

This will of course have a large impact on many lenders and landlords. 

In response to the current pandemic and the impact this is having on many livelihoods and businesses alike, the Coronavirus Act, which came into force on 26 March 2020, has made a provision for protection from forfeiture for business tenancies. 

Furthermore, a new Practice Direction has been added to the Civil Procedure Rules which provides for the courts to follow a consistent approach to staying possession proceedings. 

The key points and their impact are set out below:

Possession Proceedings

All current possession proceedings are now stayed until at least 25 June 2020. 

This also means that the court is not currently processing new possession proceedings and will not do so until at least 25 June 2020 (and this may well be extended depending on how the situation unfolds).

The same applies to warrants/writs of possession of property and all evictions are currently suspended. For example, even if a possession order has already been obtained then it will not be possible to apply for a warrant/writ of possession until after 25 June. Any warrants/writs of possession already obtained will be placed on hold until at least 25 June 2020 and the evictions cancelled. 

Following 25 June (if it is not extended), the courts will be dealing with a large backlog of possession hearings which have been vacated (as well as many other ongoing civil court proceedings) and no doubt an influx of new possession proceedings will see a delay in hearings and warrants/writs of possession being granted. 

Forfeiture Proceedings 

A right of re-entry or forfeiture for non-payment of rent may not be enforced in respect of any business tenancies until after 30 June 2020 (at the earliest as this, again, may be extended depending on how the situation unfolds). Therefore, if a lease includes a forfeiture provision for re-entry for non-payment of rent within a set time usually 14 or 21 days of a demand being made, then forfeiture action will not be able to be taken until after 30 June 2020. 

The court will not currently process new forfeiture proceedings. Should forfeiture proceedings have already been issued then the court is not able make an order for possession of the property until after 30 June 2020. 

Any rent which has not been paid during the period i.e. 26 March to 30 June 2020, will of course remain due and demands for rent can still be made during the period (unless a rent payment holiday has already been agreed). It is worthwhile trying to come to an agreement with the tenant for reduced rent during this time if a payment holiday is not a viable option for both parties. 

Furthermore, during the period the landlord’s conduct or his agent’s conduct will not waive a right of re-entry or forfeiture (unless this were to be put expressly in writing) for non-payment of rent. This means that following 30 June (as it currently stands), a business tenancy can be forfeited for non-payment of rent however this will depend on whether an agreement for reduced payments/rent holiday has been reached and whether payments are being made in line with that agreement. 

Sophie Thomas is a Director at JCP in the Recoveries and Professional Liabilities team. The department undertakes a range of work for a variety of commercial and individual clients. This includes recovery of secured and unsecured business liabilities for banking and building society clients, personal debt recovery, insolvency based litigation, general property litigation and professional negligence. Sophie can be contacted on sophie.thomas@jcpsolicitors.co.uk or on 01792 525441.