Protecting Your Lease: A Commercial Tenant’s Guide to Section 146 Notices

Given the current commercial property landscape, our property disputes team take a closer look at Section 146 notices and what they could mean for commercial tenants. A section 146 notice is a formal step a landlord may take when alleging a breach of lease. For commercial tenants, particularly in today’s shifting real estate environment, understanding the implications of receiving a Section 146 notice is crucial. Whether the issue relates to unauthorised alterations, or other covenant breaches, knowing your rights and obligations can help safeguard your position and avoid costly disputes.

Here, our property disputes team take us through the law surrounding section 146 notices. ‍

If you are a corporate tenant leasing commercial premises, understanding Section 146 Notices is vital. A Section 146 Notice can put your business continuity at risk if not dealt with promptly and properly. This guide explains what a Section 146 Notice is, why you might receive one, how to respond, and how to avoid receiving one in the first place.

What is a Section 146 Notice?

A Section 146 Notice is a formal legal notice served by a landlord when a commercial tenant breaches one or more of the lease obligations – other than the non-payment of rent. It serves as a warning that the landlord may take steps to terminate your lease, unless the breach is remedied.

Receiving a Section 146 Notice doesnot mean that your lease is automatically lost. However, it is a serious matterthat requires immediate action.

When can a Section 146 Notice be served?

Before a Section 146 Notice can be served, the following must occur:

• The tenant must be in breach of a leasecovenant (other than for non-payment of rent).
• Where the breach is remediable (e.g., disrepair, unauthorised alterations), the landlordmust first give the tenant a reasonable opportunity to fix it.
• In some cases (e.g., service charge arrears),the landlord may need a court or tribunal decision confirming the breach.
• There are special rules in place for disrepair which require specialist advice with long leases of residential property, thelandlord will in most cases need a court or specialist property tribunal decision confirming the breach.

Common Reasons Tenants receive Section 146 Notices

Alandlord may serve a Section 146 Notice for various lease breaches, the list isnot exhaustive. However, some common examples include: ‍

• ‍Disrepair: Failing to maintain the premises in thecondition required by the lease. ‍
• Unauthorisedalterations: Making changes (e.g., structural works,internal modifications) without the landlord’s written consent. ‍
• Unlawfulsubletting or assignment: Transferring or subletting the lease without the landlord’s permission where it is required. ‍
• Improperuse: Using the premises for a purpose not permittedby the lease (e.g., running a retain business in an office space). ‍
• Nuisanceor illegal activity: Conduct on the premises that causes a nuisanceto others or involves unlawful behaviour. ‍
• Failureto pay service charges: Where services charges are due and unpaid –particularly after a tribunal or court has confirmed they are payable.

Ifyou receive a Section 146 Notice there are a few things you should do rightaway to help minimise disruption to your business and risking the future ofyour existing lease.

• ‍Act immediately - delays can lead to forfeiture proceedings;
• Review the lease – understand the clause allegedly breached; ‍
• Seeklegal advice – an expert can assess whether the notice is valid and guide your next steps. ‍
• Remedy the breach (if possible) – If the breach is remediable (e.g.disrepair), take action to fix it within the time specified; and ‍
• Negotiate– Open communication with the landlord may resolve matters without litigation. ‍
• Application- Consider making an emergency application to the Court to protect the position.

How to avoid receiving a Section 146 Notice

The best defence is prevention. Commercial tenants should: ‍

• ‍Understand your lease obligations – Read and understand the terms. If unclear, seek legal advice at the outset or before taking significant action. ‍
• Request permissions in writing – For alterations, subletting, or changes in use, obtain your landlord’s consent as required under the lease. ‍
• Maintain the premises – Stay on top of repair obligations and compliance with statutory requirements. ‍
• Keep detailed records – Save all correspondence with your landlord, including approvals, repair log, and contractor reports.‍
• Pay service charges and other sums due on time – Ensure all charges are reviewed, verified and paid as due.

Final Thoughts

A Section 146 Notice is a serious step in the landlord-tenant relationship. As a commercial tenant, knowing your lease terms, maintaining good communication with your landlord, and acting promptly if a notice is served can protect your business and your right to occupy the premises.

If you ever receive such a notice, consult a property disputes solicitor immediately to protect your interests and explore your options.

If you are worried and want to speak to someone about what makes a section 146 notice valid, non-compliance or any other aspects of your commercial lease, contact our team today:

Property Disputes team: mark.davies@healys.com

Corporate team: Karen.lord@healys.com

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