Landlord Rights Against Tenant Default Under A Commercial Lease

This article examines some of the key legal remedies available to a Landlord where a Tenant is in default under a commercial lease in Bahrain. The remedies available to a Landlord include so called 'self-help' remedies as well as those requiring the commencement of court proceedings. It should be noted that some of the remedies set out in this article are not mutually exclusive and can be used in conjunction with other remedies.

What is Tenant Default? Tenant default occurs when a Tenant breaches one of the tenant's covenants in its lease. Tenant default can arise in a number of different ways but will typically be for one of the following:

Non-payment of rent or other sums reserved under the lease

Breach of the repair covenant

Breach of the alienation covenant

Unauthorised alterations

Breach of the permitted use

An act of Insolvency

Tenant default may or may not be obvious. For example, non-payment of rent is likely to be easily noticed whereas a minor breach of the repair covenant may be less obvious. However, a Landlord should be properly managing its investment and undertaking regular inspections so that any tenant default can be identified and dealt with.

Attitude and Aims Once a Landlord is aware of the tenant default, it will need to consider what action to take. Such action will be influenced by the Landlord's attitude to the tenant default as well as the Landlord's aims.

For example, a Landlord will need to assess whether the tenant default is a temporary issue or whether it is more serious. A Landlord will also need to consider whether it wishes to preserve its rental income and what the prevailing market conditions are like. Ultimately, any action taken by a Landlord will be driven by whether it wants to:

Allow the lease to continue, for the Tenant to remain in occupation and for the Tenant to continue paying rent; or

Terminate the lease and obtain vacant possession.

Self-Help Remedies Self help remedies are those which a Landlord can employ without the need to commence legal proceedings and a number of which are set out below.

Entering the premises and undertaking works that should have been done by the Tenant It is not uncommon in commercial leases in Bahrain to see a right reserved in favour of the Landlord allowing it to enter the premises, remedy any breaches of covenant and to recover the cost of doing so from the Tenant.

However, such a self help remedy is not available to a Landlord in Bahrain. A Landlord must obtain a...