Scots law has its fair share of quaint legal phrases e.g. legal rights of legitim; a decree ad factum praestandum; a coelo usque ad centrum. Another somewhat quaint term (albeit not in Latin) is “tacit relocation”. This is a common law rule which may be illustrated as follows.
Suppose there is a lease of office premises for three years and the lease document say it is to terminate on 28 February 2025. One might reasonably suppose that when 28 February arrives the landlord can require the tenant to leave on the basis that that is what the lease document says.
But no. The common law rule of tacit relocation (or “silent renewal”) is that a lease does not end at the expiry of its duration unless either party indicates that the lease is not to continue beyond that date and then for the landlord to take steps to end the lease or for the tenant to move out, as set out below. Instead, it continues by virtue of the common law doctrine of tacit relocation.
As indicated, tacit relocation operates in two circumstances:
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first, where neither the landlord nor the tenant has given appropriate notice prior to expiry of the period of the lease (often referred to as “notice to quit”); and,
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second, where the tenant has remained in possession of the property and the landlord has failed to take steps to remove the tenant following the expiry of that period or has otherwise acted incompatibly with the lease having been ended.
Where tacit relocation operates, the lease in question will continue for a further period of a year (for leases of a year or more) or for a period equal to the period of the lease (for shorter leases).
Leases of a duration of less than 28 days, and certain types of lease such as holiday lets and lets of student accommodation, are not subject to tacit relocation at all.
The Leases (Automatic Continuation etc.) (Scotland) Bill (“the Bill”)
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The Bill was introduced to the Scottish Parliament in December last year. As far as commercial leases go it puts the common law rules about “tacit relocation” onto a clearer statutory basis and re-brands them with the rather more transparent label “automatic continuation”.
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The Bill does not however apply to all types of lease, many of which already have detailed statutory provisions as to how they operate. Instead, the Bill starts by saying it applies to leases which are “not one (or more than one) of the following”.
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There then follows a detailed and somewhat convoluted list. Broadly speaking, residential and agricultural leases and crofts are not covered by the Bill. On the other hand, forestry leases, leases of shootings, and leases of fishing rights, holiday lettings certain student lettings and certain other types of leases would be covered by the Bill given that they are not specifically excluded from its ambit.
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Nevertheless, in the main, the Bill will affect commercial leases which are, essentially, creatures of the common law, unlike (in particular) residential and agricultural leases to which swathes of statute law apply.
What were the main problems with the common law which the Bill seeks to address?
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The common law rules about tacit relocation were not always clear or easy to apply. The Bill sets out replacement rules in a statutory code with appropriate reforms and using modern terminology.
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Similarly, the rules about “notices to quit” (by a landlord) and “notices of intention to quit” (by a tenant) were often problematic, and so the Bill establishes modern rules to govern the form and content of such notices; how they may be communicated; and the persons to whom they must be given.
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In particular, it was not clear whether parties to a lease could agree between them that “tacit relocation”/”automatic continuation” should be excluded, so that a lease would terminate on a specified date even if no notice was given in advance. The Bill makes clear that the lease may include a clause providing that it will not continue automatically beyond its termination date even if no notice has been given. This clause requires to be in writing, may apply irrespective of the length of the lease, and would be permitted either at the time of entering into the lease or subsequently.
Transition to the new rules once the Bill comes into force
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The general rule is to be that the new provisions would apply to leases already in existence at the time when the Bill comes into force (“the commencement date”).
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Such leases may have been in existence for many years and indeed for decades. But it was thought to be unsatisfactory for both practitioners and the public to be faced with different laws which apply to a lease depending on whether it started before the commencement date. So many of the key provisions of the Bill are to apply to all leases existing at the commencement date except in limited circumstances.
Note: This material is for information purposes only and does not constitute any form of advice or recommendation by us. You should not rely upon it in making any decisions or taking or refraining from taking any action. If you would like us to advise you on any of the matters covered in this material, please contact Kenneth Gerber: email ksg@mitchells-roberton.co.uk