Faculty comments on Commission's draft Leases Bill
The Faculty of Advocates has restated its support for ending the tacit relocation of commercial leases in response to a consultation on the Scottish Law Commission's draft Leases (Automatic Continuation etc) (Scotland) Bill.
The doctrine of tacit relocation was among issues raised by the Commission in its discussion paper, Aspects of Leases: Termination, published in May 2018. The draft bill was published for consultation ahead of the Commission's final report.
Although leases may be entered into for a fixed period, the presumption is that if nothing is done by way of serving notice before a lease comes to an end, parties consent to continue or extend the lease. In its response to the Commission's 2018 paper Faculty agreed that tacit relocation should be disapplied in relation to commercial leases.
The Commission has since developed its proposals, resulting in the present draft bill, which would replace the common law of tacit relocation with a statutory scheme to clarify, reform and partially codify the existing law, introducing new default notice periods. For leases of more than 28 days and less than six months, the proposed default period is half the duration of the lease (calculated in days and rounded up to the nearest whole day). For leases of six months or more, the proposed default period is three months.
Faculty stands by its original position that tacit relocation of commercial leases creates a default position and that prospective parties to a lease may be ignorant of its existence and consequences. Disapplication in this regard could remove uncertainty, expense and the risk of professional failure. Involved parties should however, be able to opt out of tacit relocation if they so desire, Faculty states.
It comments that although different to its own suggestion of a simple six month period for notices to quit, and the exclusion of tacit relocation for periods less than a year (failing which a period of 28 days for leases less than a year), the Commission’s proposal, "appears a reasonable solution, as a slight modification of the existing rules". It observes however that the drafting of the provisions in the bill "might be made more straightforward and more easily understood".