Law commission

Commercial tenancy reforms proposed by the Scottish Law Commission

In the event that no valid notice of termination is served by either party, and the parties have not otherwise made clear their intention to terminate the lease, the lease shall continue. Unlike England, where tenancies expire without notice, in Scotland the automatic renewal of leases can often catch landlords and tenants unaware that action is needed.

The reforms proposed by the SLC

The SLC report concluded that tacit relocation needed to be modernized and codified as new legislation. To this end, the SLC has published its Leases (Auto Prosecution etc) (Scotland) Bill (9 pages / 192kb PDF), which proposes legislation to govern related matters, including the form and service of notices of resignation.

The bill would codify the law of tacit relocation as “automatic renewal” and specify that commercial leases will automatically renew for a period of one year after their termination date – or for the same period as the lease for leases of less than one year. The parties may derogate from the tacit renewal of the commercial lease or vary the duration of the renewal.

The bill would also create a default statutory position on how landlords serve notices of resignation and how tenants serve notices of intention to resign – including whether service of notices is required and the notice period to be served. give. It would also empower sheriff’s officers to serve notices of irritance, which terminate a lease due to a breach by the tenant.

In the event that a period of rent is due which extends beyond the end of the lease, the leases must specify that the lessor will reimburse to the lessee the part of the rent which relates to the period after the termination.

Both the SLC report and the bill have been submitted to Cabinet Secretary for Justice and Veterans Affairs, Keith Brown, for consideration. The Bill could be presented to the Scottish Parliament in the coming months, assuming the reforms are prioritized by the Scottish Government and given the necessary parliamentary time.

Evolution not revolution

The fact that the existence of tacit relocation is often unknown to owners and tenants alone justifies that the law be codified and modernized. The innovation of the law by allowing commercial parties to enter into a tacit offshoring contract – and to choose the terms of their agreement – ​​is welcome. By keeping the “heart” of tacit relocation, the SLCs propose an evolution and a clarification of the law in this area rather than the revolution that some anticipated.

One area where some may see the SLC proposals as lacking is that the default rules on notices leading to lease termination only seem to apply to notices of resignation at the end of a lease. This means that serving a notice of termination – ending the lease on an agreed “break date” – will be subject to existing law, rather than being subject to the new code.

Co-written by Brian Grierson of Pinsent Masons.