Date: 10/08/2017 | Commercial Property, Dispute Resolution
In Scotland, leases do not automatically terminate on the agreed date of expiry. In order to terminate a lease, either the landlord or tenant must serve notice on the other party of their intention to terminate the lease. It is important for both landlords and tenants to be aware that failure to serve the required notice results in the lease continuing beyond the contracted termination date. Should tacit relocation occur, the lease will continue on the same terms and conditions.
In this case, the Sheriff found that actions purported to be taken by the landlords did not amount to sufficient notice to the tenants that the lease was being brought to an end at its expiry date. The landlords had leased the business premises known as Unit 1, Drummond Square, Brucefield South Industrial Park, Livingston to the tenants. The landlords argued that the lease continued by tacit relocation for a period of one year and sought payment from the tenants of the rent for this period. However, the tenants argued that certain actions of the landlords amounted to notice to the tenants that the lease was being brought to an end at its original expiry date and therefore tacit relocation had not occurred.
The tenants’ main argument against tacit relocation revolved around an inquiry made by the landlords’ agent regarding the current subtenants’ ability to pay rent. It was argued by the tenants that this inquiry amounted to sufficient notice by the landlord of their intention to terminate the lease. Not surprisingly, the Sheriff found “an inquiry about the subtenants’ ability to pay the rent could never in [his] view amount to the “explicit” notice to the tenants that the lease was being brought to an end”.
The decision also reaffirms the common law position that verbal notice is sufficient by either party of their intention to bring a lease to an end. The Sheriff went further to note that as well as verbal notice, the actions of either party can be sufficient to infer the intention to terminate a lease.
This case serves as an important reminder for both landlords and tenants to be mindful of their actions which could be interpreted as an intention to terminate the lease. Landlords or tenants wishing to bring a lease to an end should ensure that timely and effective notices to quit are served on the other party so as to minimise any ambiguity regarding whether or not a lease has effectively been terminated.
If you require any further information please contact our Commercial Property team.
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