A Notice to Quit is essential

Legal matters

STUART KING

MISLEADING as it may sound, under Scots law property leases do not automatically come to an end when the specified date of expiry is reached; the only way for a landlord or tenant to ensure the termination of the lease is to serve on the other party a Notice to Quit.

In the absence of such a notice being served the silence is taken as consent to tacit relocation. This means that the law presumes that the parties intend that the lease should continue. If the original lease was for a period of less than one year the extension will be for the same duration. However, if the original period was for a year or more, the lease will only continue for one year (and will then continue on a year by year basis until the required period of notice is given). Aside from the extended duration, the lease continues on the same terms and conditions as the original lease.

One reason that this issue is of such practical importance to landlords is that, under tacit relocation, the amount of rent payable will remain the same, even though it may no longer be in line with the current market rent. Some landlords may try to provide in the lease for a rent review to take place, on the first day of the extended term, in the event that tacit relocation occurs.

Tacit relocation can however also be a useful and time saving tool for the parties if they have agreed that the lease shall continue on the same terms as before, and this will be achieved by both parties not serving a Notice to Quit.

If either party does wish the

lease to terminate on the original expiry date then they must serve a timely and accurate Notice to Quit. The requisite period of notice varies depending on the type of lease and size of property involved. Generally the period of notice required is 40 clear days. If the lease is for four months or less, the period of notice is one third of the duration of the let. There is a separate regime for agricultural holdings and for leases of land exceeding two acres. In these cases, the general rule is that the period of notice must be not less than one year.

The lease may state how notices should be served (i.e. by recorded delivery). In any case, even if the lease is silent, it is strongly advisable to always give notice in writing and use recorded delivery when sending the notice by post. This should provide evidence when the notice was received and therefore when the period of notice begins to run. If the notice served is late or inaccurate, the lease may be extended by tacit relocation despite one party having

Tacit relocation has advantages as well as disadvantages, argues Stuart King

expressed a desire to the contrary.

An exception to a landlord’s ability to serve an effective Notice to Quit applies with regard to retail property under the Tenancy of Shops (Scotland) Act 1949. A tenant, receiving a Notice to Quit may, within 21 days, apply to the Sheriff Court for renewal of the lease if it has been unable to agree or renew on satisfactory terms. The court then has the power to renew the lease for a period not exceeding one year on such conditions it thinks reasonable. Telecoms’ operators also have the ability to challenge termination of their leases.

Due to the complexity of the law, the best advice to companies or individuals who are involved in a lease is to keep track of when the termination date is approaching and always serve a timely Notice to Quit to prevent any unwanted extensions.

Stuart King is a senior associate in the Edinburgh office of Tods Murray: stuart.king@ todsmurray.com