Agriculture: Ending LDTs in a second short continuation

Readers who practise agricultural law will be aware of the cycle of continuations for limited duration tenancies (“LDTs”) under the Agricultural Holdings (Scotland) Act 2003, which supplants common-law tacit relocation. Less well known is the procedure for serving notice to quit during a second short continuation, which differs from that which applies at other times. This will become important in 2024.

A landlord wishing to terminate an LDT on expiry of the initial term must give two notices to the tenant: a notice of intention to terminate, not less than two years nor more than three years before the expiry date, and a notice to quit, not less than one year nor more than two years before that date, with at least 90 clear days between notices (2003 Act, s 8(3)-(5)): the “double notice procedure”. (For tenants, only a notice of intention to quit is required, served not less than one year nor more than two years before expiry date.)

A tenancy not brought to an end after the initial term is continued for a first short continuation of three years. The same double-notice procedure for landlords applies during this phase. If the tenancy is not terminated, there is a second short continuation for a further three years; after that it enters a long continuation of a further 10 years. The cycle then repeats.

Second continuation terminations

Introduced by the 2003 Act, LDTs originally had to be for a minimum of 15 years, so the first to be granted, if not terminated, will have entered their second short continuation in November 2021, and could enter a long continuation in November 2024 which would run (unless terminated by agreement) until November 2034. Few practitioners will yet have needed to serve a notice to quit during a second short continuation, but this may become more common during 2024 as landlords may not wish a further 10-year extension.

The procedure is set out in s 8(8)-(10) of the Act. The key difference is that a notice of intention to terminate is not required. A landlord only has to serve a notice to quit, at any time during the continuation, presumably since the consequence of missing the deadline again is a 10-year extension. However, there is a catch, and with it comes an awkward pitfall.

In order to ensure tenants still have at least two years’ notice, s 8(10) provides two methods of calculating the “relevant day” on which the tenant is to quit the land. If notice is given during the first year of the continuation, it is the day on which the continuation expires; if after the first year, it is the date two years after the notice is given. The second short continuation is then extended and deemed to expire on that date, which could be any day of the year.

An example

A worked example may be helpful. Say an LDT was granted for 15 years from 28 November 2005, and is still in force. The second short continuation will have begun on 28 November 2023 and will expire on 27 November 2026. You receive instructions from the landlord in October 2024 to terminate the tenancy. You can do this by sending a notice to the tenant stating “you are to quit the land on 27 November 2026”, provided it arrives by 27 November 2024.

Here comes the pitfall. Say you receive instructions in December 2024. What date should you put on the notice? Not 27 November 2026 – you are too late. By s 8(10)(b), the relevant day is “the day on which the period of two years from the giving of the notice expires”. A notice is generally considered “given” when the addressee receives it. But how can you know, when preparing your notice, the date when it will arrive?

In our first example, if the landlord’s agent accidentally wrote “you are to quit the land on 26 November 2026” instead of 27 November, the notice would be invalid – potentially an expensive mistake for the agent. But when the date to be stated depends on correctly predicting when the notice will arrive, how do you avoid that mistake?

One might be tempted to allow slightly more time than necessary, since doing so does not prejudice the tenant. But this is at odds with the accepted view that a notice to quit must match exactly the legally correct expiry date.

Can you say “you are to quit the land on the day falling two years after your receipt of this notice”? Perhaps, but that would be a novel concept, and it would be a brave solicitor who tries it before there is a precedent. To play it safe, you need to ensure that the date the notice is (or is deemed to be) given is certain when you send the notice.

Methods of service

The Interpretation and Legislative Reform (Scotland) Act 2010, s 26 says, in brief, that you can serve a notice: (a) by personal delivery (not always practical); (b) by registered post; or (c) by email, if the recipient has agreed in writing and provided an address. With (b) and (c) the notice is taken to have been received 48 hours after it is sent, unless the contrary is shown.

This still leaves the possibility that the notice arrives on a different day, and the recipient is able to prove that. The solution I have adopted was to send the notice by 0900 guaranteed delivery, for maximum certainty as to the date of arrival. The relevant day was therefore two years and one day after the date of posting. On this approach it is necessary to prove that the notice did in fact arrive the next day, to overturn the 2010 Act presumption.

You could also give notice by email, as long as you have a way of overturning the 48-hour presumption. Perhaps your firm’s IT department can help. Readers may come up with other solutions and I will be interested to hear them.

With the first LDTs granted, to avoid a long continuation, a notice to quit must be served by 27 November 2024. If that were done on the last day possible, the LDT would end on 27 November 2026; failure would mean an extension to 27 November 2034. It is likely that many solicitors acting for landlords will receive last-minute instructions of this nature, and need to work out how to do it correctly. (For tenants, the procedure is the same as at other times.)

One suspects that the drafters created this catch-22 by accident rather than design. Nonetheless, practitioners should beware, especially as the first major batch of long continuations approaches.