The Doctrine of Waiver in Commercial Leases

Why landlords and tenants need to act carefully when rent is unpaid or another lease obligation is broken

A commercial lease will usually give the landlord a right to bring the lease to an end, known as forfeiture, if the tenant breaks its terms. However, that right can be lost surprisingly easily. A landlord who knows about a breach but then acts as though the lease is continuing may waive the right to forfeit for that breach.

This issue commonly arises where rent has not been paid. Routine steps such as sending the next rent demand, allowing an automated payment to be retained, or accepting rent that fell due after the breach can have significant consequences. Before taking action, both the lease and the chronology should be checked carefully.

What is the Doctrine of Waiver?

In this context, waiver is the legal principle that requires a landlord to choose between treating the lease as at an end because of a breach and treating it as continuing. A waiver will generally arise where the landlord has knowledge of the relevant breach, nevertheless does something which recognises the lease as continuing, and communicates that act to the tenant.

The test is objective. The question is not simply what the landlord intended, but what its words or conduct would reasonably communicate. Describing a demand or receipt as “without prejudice” will not necessarily prevent waiver if the conduct itself is only consistent with the lease continuing.

Why non-payment of rent needs particular care

A failure to pay rent on the contractual due date is generally treated as a “once and for all” breach. The fact that the money remains outstanding does not usually make the original breach a continuing one. If the landlord waives the right to forfeit for that missed payment, it cannot normally revive that same right later simply because the arrears remain unpaid.

A fresh right may arise when a later rent payment falls due and is not paid, provided the lease permits forfeiture and any contractual grace period has expired.

Demanding or accepting rent that accrued after the breach may waive the existing right to forfeit if the landlord knew the relevant facts. By contrast, demanding or accepting sums that accrued before the breach will not ordinarily affirm the lease in relation to that later breach. Timing matters, and so does the period to which a payment is allocated.

What is a “once and for all” breach?

A once-and-for-all breach is completed at a particular point in time. Its effects may continue, but the breach itself is not repeated from day to day. Common examples can include non-payment of a particular instalment of rent, an unauthorised assignment or subletting, or carrying out prohibited alterations. The precise classification always depends on the wording of the lease and the facts.

If a landlord waives the right to forfeit for a once-and-for-all breach, that right is generally lost permanently in relation to that particular issue. Other remedies, such as a debt claim or an injunction, may remain available.

What is a “continuing” breach?

A continuing breach is one which is committed afresh for as long as the tenant remains in breach. Certain failures to repair, maintain, insure, reinstate or comply with an obligation to do something throughout the term may fall into this category, although the wording of the covenant is critical.

Waiver does not have the same final effect here. It may waive the right to forfeit for breaches occurring up to that point, but a fresh breach — and potentially a fresh right to forfeit — arises while the non-compliance continues. This does not make immediate action unnecessary: notice requirements, the tenant’s ability to remedy the breach and the landlord’s later conduct still require careful analysis.

Who needs to be aware of this?

The Doctrine of Waiver is relevant to commercial landlords, tenants, managing agents, asset managers, accountants and anyone responsible for rent collection or lease administration. It is particularly important where payment systems are automated or several people communicate with the tenant, because knowledge and conduct within the landlord’s organisation or its authorised agents may affect the position.

How does this affect commercial property landlords?

A landlord considering forfeiture should pause routine lease-management activity as soon as a possible breach is identified. That may mean placing a rent stop on the account, suspending automated demands, telling agents not to accept payment, and obtaining advice before corresponding with the tenant. Money received may need to be held without appropriation or returned promptly, depending on the circumstances.

For breaches other than non-payment of rent, a landlord will usually need to serve a notice under section 146 of the Law of Property Act 1925 before forfeiting. The notice must identify the breach and, where it is capable of remedy, require it to be remedied within a reasonable time. Non-payment of rent is generally treated differently, but the lease’s forfeiture clause and any grace period must still be checked.

How does this affect commercial property tenants?

A tenant should not assume that a landlord’s demand for rent or continued correspondence means every breach has been forgiven. The legal effect will depend on what the landlord knew, what was demanded or accepted, when the relevant sums accrued, and whether the breach is once and for all or continuing.

If forfeiture is threatened, early advice is essential. A tenant may be able to challenge the landlord’s right to forfeit, argue that it has been waived, remedy the breach, negotiate terms, or apply to the court for relief from forfeiture. Delay can narrow the available options and increase cost.

Practical points when rent is unpaid

• Check the lease, the rent due date, any grace period and the scope of the forfeiture clause.
• Establish exactly when the landlord first knew the facts amounting to the breach.
• Review later demands, invoices, receipts, correspondence and conduct.
• Identify when each sum accrued, not merely when it was demanded or paid.
• Stop automated rent collection and instruct agents before an accidental waiver occurs.
• Take advice before changing locks, issuing proceedings, returning money or agreeing a payment plan.

How can Fraser Dawbarns help?

Our commercial property and property disputes teams can advise landlords and tenants on lease breaches, rent arrears, waiver, forfeiture and relief from forfeiture. We can review the lease and payment history, assess whether a right to forfeit has arisen or been waived, prepare or respond to notices, and help you choose a practical route that reflects your commercial priorities.

Early advice can prevent an administrative step from becoming an expensive legal problem. To discuss a commercial lease issue, contact Fraser Dawbarns at one of our offices in King’s Lynn, Wisbech, Downham Market, March or Ely, or use the enquiry form on our website.

This article provides general information about the law in England and Wales and is not a substitute for advice on the particular facts of a case. The law and available remedies may change, and the terms of the lease will be important.

How To Contact Us:

To contact a member of our team, you can fill in our online enquiry form, email info@fraserdawbarns.com, or call your nearest office below. If you’d like to speak to a member of our team at one of our offices across Norfolk and Cambridgeshire, visit our offices page.

Wisbech: 01945 461456

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This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However, no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek advice specific to your own circumstances. Fraser Dawbarns LLP is always happy to provide such advice.