Five point guide for commercial landlords: Understanding disclaimer and your options

According to Government statistics released this week, the number of registered company insolvencies in England and Wales during February 2026 (1,878) was 7% higher than in January 2026, driven by an increase in creditors' voluntary liquidation. When a tenant collapses into liquidation (whether voluntary or compulsory), its landlord can suddenly find itself holding an empty property, with no income stream. Often the uncertainty this creates is compounded when a liquidator disclaims the lease, leaving the landlord unsure about what this all means for the lease it once had and any liabilities under it. Understanding disclaimer is crucial to those involved in managing assets and those hoping to take back control. In this guide, we will demystify disclaimers, explain their effect, and set out five important things a landlord needs to know about what happens next.

What is disclaimer?

Disclaimer is a statutory power under the Insolvency Act 1986 allowing liquidators, trustees in bankruptcy, and in certain situations the Crown, to jettison “onerous property”. Unsurprisingly, most commercial leases, which impose ongoing obligations and liabilities, will fall into this category. As its duty is to wind up the company in the best interests of its creditors, it is very common for a liquidator to disclaim the lease as soon as it is appointed in order to protect the insolvent company’s estate from those ongoing obligations and liabilities.

How does disclaimer take effect?

A liquidator can disclaim simply by giving formal notice of disclaimer in prescribed form to all interested parties. It can exercise this power in both voluntary or compulsory liquidations and without any court involvement. This means that, other than ensuring the disclaimer has been prepared and served correctly, the scope for challenging a disclaimer is narrow. The liquidator’s power to disclaim can be exercised at any time, so even after the lease has expired.

A disclaimer takes effect once it is served on every person with an interest in the property and no application for a vesting order (which vests the lease in another interested party) has been made within 14 days of the notice. A landlord, who will be one of the company’s creditors, is likely to have already been contacted by the liquidator as soon as they are appointed and should, therefore, be live to the possibility that the liquidator might disclaim and keep a look out for any notices it receives. Landlords should therefore keep their registered office details up to date to ensure that it receives notice of the disclaimer in good time and can act on it quickly.

Five things to be aware of once a valid disclaimer takes effect:

The tenant company is automatically released from all lease liabilities. The tenant company is freed from all obligations under the lease and, unless there are any surviving third party interests, for all intents and purposes the lease comes to an end. However, a landlord will still be invited by the liquidator to claim in the liquidation via a proof of debt for arrears and future rent until the end of the lease subject to certain discounts.
The rights and liabilities of others continue. A disclaimer determines the rights, interests and liabilities of the insolvent tenant in the premises, but in relation to third parties, such as guarantors and former tenants, the landlord-tenant relationship is preserved. The disclaimer therefore does not affect the rights or liabilities of any other person including guarantors or former tenants under an Authorised Guarantee Agreement (AGA) or a Guarantee of an Authorised Guarantee Agreement (GAGA) as if the lease had continued. The liability of a former tenant or guarantor will only end if the AGA or GAGA, expressly provides for that. If a landlord is fortunate enough to have a former tenant or guarantor on the hook under a lease granted before 1 January 1995 (an ‘old’ lease), it can simply pursue them for these sums as a debt claim. This is because former tenants and guarantors under an ‘old’ lease who guaranteed a tenant’s future performance will remain on the hook automatically on assignment. If the lease was granted after 1 January 1995 and the former tenant (or guarantor) entered an AGA (or GAGA), the landlord can only claim back “fixed charges” (such as rent, insurance and service charges) if it has served notice on the former tenant (or guarantor) within 6 months of the sums falling due. This is important because the landlord may need to act quickly if this deadline is approaching soon after the disclaimer takes effect. Depending on the specific wording of the guarantee in the lease, the landlord may also have a claim against existing guarantors of the current tenant.
The landlord may have the option to require a former tenant or guarantor to take a new lease within 6 months of disclaimer. Depending on the wording of the guarantee, a landlord may have an option to require the tenant to take a new lease on the same terms for the balance of the term of the disclaimed lease as long as it gives the former tenant (or guarantor) notice within a certain period of time (usually 6 months) of disclaimer. This depends on the express wording of the guarantee, so the landlord should check these provisions carefully and consider any options it might have.
The landlord is under no obligation to take back possession following disclaimer. The landlord is under no duty to mitigate its losses. So, if the landlord finds that it is left with premises that cannot easily be re-let, it may wish to preserve its right to pursue former tenants or guarantors until it finds a new tenant. It can do this by making sure that it avoids taking any steps which might be interpreted as treating the lease as at an end for all purposes. Obvious ways it could do this is by accepting a surrender, forfeiting the lease, or granting occupation rights to third parties. Less obvious ways include accepting receipt of the keys or taking steps to secure the property in such a way that could be considered inconsistent with the lease continuing. Seeking express confirmations from the liquidator or third parties about any steps the landlord wishes to take could help to minimise any risks here. Even if the landlord does not take back possession, this will not stop a local authority from pursuing a landlord for business rates irrespective of any ongoing third-party liability and payment of rent by a former tenant under an AGA. Whether the landlord can subsequently recover this cost from a guarantor or previous tenant will depend on the terms of the guarantee.
A subtenant’s rights against the tenant will end but the disclaimer will not end the subtenant’s interest in the premises. The landlord is left in a rather unfortunate position because it cannot directly enforce the disclaimed lease against its sub-tenant. Instead, the landlord could apply for a vesting order to have the disclaimed lease vested in the sub-tenant. Generally, the application to vest must be made within 3 months of the disclaimer.

Tenant insolvency and its impact on property rights can be complicated. If you are a commercial landlord and your tenant company has had a winding up order made against it, you should be live to the possibility of disclaimer, understand how this may impact you and your rights, and seek early legal advice before deciding what action to take and when.