Tacit relocation should end for commercial leases: Faculty

Tacit relocation – the doctrine by which a lease continues beyond its termination date if not formally ended – should end for commercial leases, the Facuty of Advocates believes.

Faculty was responding to a Scottish Law Commission discussion paper on aspects of termination of leases.

Agreeing with a proposal in the paper, it argues that the doctrine creates a default position of which parties to a lease could be ignorant of both its existence and its consequences.

"We consider that tacit relocation gives rise to a number of consequential requirements (e.g. notices to quit) which in turn can create complexity, uncertainty, expense and the risk of professional failure. The disapplication of tacit relocation and its consequences would have the benefit of removing these unwelcome consequential effects", the response states.

"In addition, we consider it relevant that in respect of commercial contractual arrangements, Scots law has always placed emphasis on parties’ express contractual terms… To that extent, the doctrine of tacit relocation might be seen to ‘swim against the tide’."

It would also be inappropriate to provide for a right to opt or contract in to tacit relocation.

Faculty further believes that the commonly used, and default, period of notice of 40 days is too short.

While it notes various alternatives, such as allowing parties to determine the period of notice, or having different minimum periods in different circumstances, "we consider consistency and minimising possible disputes points to a single minimum period as being preferable, which period we consider should be six months".

No set statutory rules should apply to break provisions, since these are a matter for the parties to the contract.

Faculty declines to comment in a general question as to whether the law of irritancy requires reform, as "We consider that any reform of the law of irritancy should be approached on a comprehensive basis and therefore we make no further comment."

Click here to view the full response.