If you are a landlord or a tenant then it is important that you’re informed about the rules around section 146. If you haven’t heard of it is likely because you haven’t looked at the complex laws of the property act.
In short, a section 146 is just a legal document and throughout this article, we will be looking into what it does such as what the common ways you can serve this notice are and what the notice is for in the first place.
Download your section 146 notice here
So you don’t have to get in contact with a solicitor, lofti have provided our own free section 146 notice available for download below. You should still check that there are the right terms on the agreement for you and fill in the form as required before you send it off.
There are also consequences for not using the document in the correct way which we’ll get into and there are also things that can occur like if the notice is invalid that you must avoid.
So, read on for all the information you need and be sure to check out the government website here on the matter if you feel as though you need further clarification on what you’re reading.
However, this article aims to lay things out in an easy to read format so you can understand this part of the law without a solicitor and without having to look up a bunch of legal terms just to understand what is being said.
If you are a tenant and are not happy with your section 146 notice, you may wish to instead own a freehold property. This is one of the advantages you can benefit from when looking at freehold vs leasehold buildings.
It is useful to note that the same doesn’t apply to commonhold property as the rules around changes to a property are discussed within a group of a few people.
What is a section 146 notice?
A section 146 is something that landlords can serve to their tenants if the tenant violates a lease covenant. So, if a tenant essentially breaks any term in their leasehold agreement, this document is produced. For instance, it may be served in order to start the process of a forfeiture of a lease.
A section 146 is part of legislation in terms of the Law of Property Act of 1925 and this piece of the law is the source of where all this information comes from and concerns, leasehold, freehold and commonhold property.
If the breach is not corrected, the tenant’s lease may be terminated, which is why it is critical to take the notice seriously and correct the breach so a landlord is essentially exercising their right to end a lease by serving a section 146.
If the breach is not resolved, they can terminate the lease early and would have the legal right to do so without having to ask the court or go through any further procedures. As long as the notice was served correctly.
What is included in a section 146 notice?
When serving a Section 146 notice, certain requirements must be met in order for the notice to be valid. The notice should specify the violation and require the tenant to correct it, as well as provide compensation for the violation.
As an example in real life, if the breach of the covenant of the lease was the failure to pay service charge then the landlord would state this in the notice and ask the tenant to pay for the outstanding charges and perhaps with interest.
If the breach is resolvable and the tenant is not given a reasonable amount of time to fix the problem, the notice is invalid and seen as not legitimate in the court of law. So, giving the right amount of time is important for a landowner.
In general, the answer to this lies in whatever is reasonable but it depends on the amount of time that the outstanding breach has gone on for and also the severity of the breach too.
Typically, breaches that are more severe and are due to a lack of payment from a tenant require a longer period of time and the smaller things require a short period of time.
It is important to speak to a solicitor when it comes to these types of things as the right length of time varies quite a bit. Much like you should speak to a solicitor about other things like adverse possessions.
Adding to this, it is critical to include all necessary information in the Section 146 notice, so seeking legal counsel can help ensure that it is done correctly.
In addition to the breach being corrected in the right way, a landlord has the right to receive monetary compensation from their tenant.
However, if compensation is not claimed in the notice, you cannot later sue for breach of contract. If you require compensation, make sure to request it in the notice.
When you should use a section 146?
If you discover that your tenant is violating the lease agreement of a leasehold, it is critical that you notify them with a section 146 notice as soon as possible to accomplish this.
This type of notice is used to notify the tenant of the violation and to encourage them to correct it. If the breach is not corrected, it is also the first step towards the landlord gaining the right to end their agreement.
When using a section 146 notice, certain rules must be followed. If the breach is related to nonpayment of rent, service charges, or administration charges, you cannot serve the notice unless the arrears exceed £350 or include a payment that has been outstanding for three years.
Other common covenant violations include tenants making unauthorised changes to the property, failure to pay service charges, and noise complaints.
So, if you are unsure whether the violation warrants a section 146 notice, you should seek legal counsel.
It is critical to include specific details in a section 146 notice and get as detailed as you can. Things like highlighting what the breach is that the tenant has done, whether it can be remedied, and if so, within what time frame.
If in doubt about whether to include something in a section 146 notice, the answer is usually to include it if you can as there is no harm in including some information that isn’t going to be that helpful. Especially when writing a section 146 without legal help.
If applicable, you should also require the tenant to pay monetary compensation for the breach and give them an indication of how much this is going to be.
Remember that if you do not give the tenant a reasonable opportunity to correct the breach, the notice will be null and void. As a result, it is critical to ensure that the time allotted is reasonable.
If you are unsure how to draft an S146 notice, it is best to seek legal advice to ensure that everything is included and that the procedure is followed correctly.
Why would you give a section 146?
In general, except for nonpayment of rent, a section 146 covers most covenant violations.
A tenant may receive one if they conduct unauthorised alterations to the property, damage a property, sublet a property without consent, produce noise complaints and park on a neighbour’s drive.
These are all examples of section 146 violations that if a landlord becomes aware of could easily and is well within their right to notify the tenant with a section 146 or without a formal notice.
However, if the tenant fails to correct the violations, the landlord should send a formal section 146 notice eventually as this is the only way that it will hold up in the court of law if they wish to terminate a lease.
What are the reasons for a section 146 being invalid?
As a landlord, you must ensure that any section 146 notice you serve is legally binding by making sure there are certain elements in the document.
To begin, you must specify exactly what breach of the covenant occurred, if you don’t then the notice is deemed invalid and will not hold up if the tenant challenged the notice.
Another reason why the notice may be seen as invalid is if the landlord asks the tenant to repair the breach of the agreement in too short of a time.
For example, if they have knocked down one of the dividing walls of a property and this was against the covenant of the lease, a tenant could be given a reasonable amount of time of two months to bui;d their wall back.
It is useful to note that the landlord doesn’t have to give the tenant any financial help with repairs as it is seen as the tenants fault for causing damage and their fault to put things back to normal. If anything, the tenant compensates financially in any case.
It is critical not to ignore any of these things that make a notice invalid. If you do, you may not be able to end the lease agreement. You can, however, choose to ‘park’ the acceptance of rent instead, which means it is owed but remains unpaid.
After a section 146 has been served, what happens next?
After serving a section 146 notice, the landlord must ensure that the leaseholder has received and understood the breach of the covenant.
This is done by giving a reasonable amount of time (usually weeks) for a tenant to get back to you or you follow up with the tenant to ask them if they are conducting repairs or if they have any plans to do so.
This is significant because if you do not give the tenant a reasonable amount of time to correct the breach, this is another one of the ways that a notice is seen as invalid as talked about previously.
In addition to correcting the violation, the notice may request compensation for the damage to the property too and this is another reason to give a reasonable amount of time as the tenant may need to gather some funds.
If the tenant fails to correct the breach, only then does the landlord have the right to forfeit the lease, repossess the property, and seek compensation.
If the landlord has any type of insurance then this is also something they may begin to use in order to gain back the money lost as they have to repair the breaches of the lease themself.
It is important to note that any acceptance of rent after the notice has been served may not allow a landlord to end the lease as it shows that the matter has been resolved. To avoid this, you can ‘park’ the acceptance of rent, which means that it is owed but not paid.
How long is given after a section 146 is served?
There is no set time limit for giving tenants time to repair a covenant breach as it is determined by how in depth the breach is and also how much time it is going to take to repair.
Property damage, for example, will take longer to repair than noise complaints so you have to find the right middle ground between the extent of the breach and the time that should be given to a tenant.
If you’re unsure how much time to allow, you should consult with a property solicitor and they can assist you in determining what is reasonable in your particular situation.
It is usually not until you find yourself in a situation where you have to serve a section 146 that it is clear how hard it can be to give a length of time.
For example, how long should it take to repair wall holes? Should the tenant be able to stay for a week, two months, or longer? These are all questions that a solicitor can answer.
When serving a section 146 notice, it’s critical to give the tenant enough time to respond and correct the violation though. Otherwise, the notice may be declared invalid.
Are there any requirements for how to serve a section 146?
When serving notice, it’s critical to have some kind of proof of delivery to make sure you have some kind of evidence to back it up that the notice has been served. A popular method is to have a neutral witness present when you serve the notice who can vouch for either party.
However, there are some other methods you can use in the process:
Delivery in person
You could do it in person, which would involve you physically handing the tenant the notice. In this case on the same day the letter is given is the same day the notice was served.
How recorded delivery works is If the envelope is returned unopened, the landlord will not have served the notice officially and has to try another method. But, if the tenant accepts the delivery, the notice is served on the day of delivery.
Leaving it someone’s address
You could also address an envelope to them and leave it at the property or mail it through the letterbox. It is vital to note that the notice will be deemed “served” three days after it is delivered to the property in this case.
Use a process server
You could also have a process server serve the notice on your behalf. This is a professional service that can provide legal proof of service and they will be at fault if there is any delay.
First class delivery
You could also serve notice via first-class mail, which takes two business days to arrive. As a result, the notice period will be two days.
Delivery by email
You could also serve notice via email. If you do this before 4.30 p.m. on a business day, the notice will go live that day. If you send it after 4.30 p.m., it will not become active until the following working day.
What happens if the violation isn’t repaired by the tenant?
Sometimes, tenants do not do what they are asked in section 146 and a landlord does not end up with their property in the condition they want.
So, if a landlord serves a section 146 notice, the first step is to ensure that the tenant has received and comprehended it before they are able to take further action on a tenant who has not conducted repairs.
If the tenant fails to comply with the notice, the landlord may forfeit the tenancy. However, because there is no other way to terminate the lease, this must be done through the County Court.
If the tenant is facing forfeiture, they may seek relief from the order. However, if the tenant disagrees with the section 146 notice, they can file a legal challenge.
To accomplish this, the tenant can serve a counter-notice delaying the lease’s forfeiture until the court agrees.
To wrap up this topic and go over the main points, a Section 146 notice is a legal document used by landlords to inform tenants of a lease covenant violation. If the tenant does not correct the breach, the landlord can terminate the lease early.
However, the notice must include specific details such as the violation and the amount of compensation required and it is important to give the tenant a reasonable amount of time to fix the problem too.
Some common covenant violations include unauthorised changes to the property, failure to pay service charges, and noise complaints but there are a wide range of things a leasehold may run into throughout their ownership of a property.
If not sure, a landlord should seek legal advice to ensure that the notice is valid and legally binding and after serving the notice, the landlord must ensure that the tenant receives and understands it.
For some free advice on the topic that applies for generally, see the government website here.
When can a landlord serve a Section 146 notice?
A landlord can serve a Section 146 notice when a tenant breaches the terms of their lease or commits a violation, allowing the landlord to forfeit the lease.
How do I issue a section 146 notice?
To issue a section 146 notice, download the template above and then send the notice to the commercial tenant by post
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