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Have you thought about your lease recently?

Bob McIntosh

Every tenant who took on a tenancy after November 2003 is likely to have a fixed duration tenancy, which might be a Short Limited Duration Tenancy (SLDT) a Limited Duration Tenancy (LDT) or a Modern Limited Duration Tenancy (MLDT) and should have a written lease which clearly sets out the rights and obligations of the landlord and tenant and which complies with relevant legislation. Tenants with a secure (1991 Act) tenancy, however, may have a very old lease or no lease at all as it is possible for a secure tenancy to operate with no written lease. In such circumstances the position with regard to rights and obligations will  generally default to the standard arrangements set out in legislation. If either landlord or tenant is unhappy with the consequences of lack of a written lease, either party can make a request to the other party, in writing, for a written lease, or indeed for a revisal of an existing lease if some terms in the lease have been superseded by subsequent legislation. The parties then have 6 months in which to conclude an agreement, failing which, the terms of the tenancy must be referred to the Land Court. The Land Court is likely, as a minimum, to require that the lease identifies the parties involved, the subjects of the lease, the duration of the lease, the rent payable, and the obligations of landlord and tenant to deal with fire insurance and damage.

Many secure tenants seem to have difficulty in knowing where their lease is! Often it is in a box in the attic or lodged with a solicitor but hasn’t been looked at for years, if at all. In reality, it is very important that both parties to a lease fully understand what their rights and obligations are. Leases will generally include information on important issue such as the ability of the tenant to assign the lease and the rights of the landlord when it comes to resuming land from the lease. Its also very important for tenants to be clear about who their landlord is. If that entity has changed over time, the tenant should have been formally notified of the change but if this is overlooked, the tenant is at risk of serving notices, such as those associated with proposed tenant’s improvements, on the wrong landlord and finding that the notice is invalid. Tenants should ensure that, not only are they clear about the exact denomination of their landlord but that the address to which any communication with them is sent is clear. If there is any doubt, the tenant should seek clarification of those issues from their landlord.

Where tenants have a lease where more than one party is involved, the tenants need to be careful to recognise the difference between a joint tenancy and a partnership. The fact that, for example, a father and son run the farming business as a partnership, does not mean that they are joint tenants. The tenant is the entity described in the lease so if that is a single person, the fact that the business is run as a partnership with another family member has no bearing on who is the legal tenant. Where the lease is clearly to a family partnership, and that partnership is therefore the tenant, a change in the make up of the partnership may mean that the tenancy is no longer valid, so if a change in the composition of such a partnership is anticipated, or has taken place, it is important that professional advice is taken on the consequences.

Prior to 2003 it was not uncommon for Post Lease agreements to be made between landlord and tenant which altered some of the provisions in the lease and which enabled either party to contract out of their legal obligations. It was not uncommon for a landlord to require a post lease agreement to be entered into as a condition of a rent review or of the granting of consent for a tenant’s improvement. In many cases the purpose of a post lease agreement was to transfer the standard landlord’s obligation to renew and replace worn out fixed equipment to the tenant. Legislation in 2003 prevented any new post lease agreements from being entered into and enabled tenants to apply to have existing agreements nullified. To do so, the tenant must give the landlord, no longer than 6 months before the date from which any variation of rent will take effect, a written notice stating that the agreement is to be nullified on that date. It is a condition that the fixed equipment must be in no worse a state than when the post lease agreement was signed and the tenant can expect that the landlord will seek a rent increase in return for taking back responsibility for renewals and replacements.

Farm track with Ben Wyvis in the background