End tacit relocation of commercial leases, argues Faculty

 

SUPPORT has been voiced by the Faculty for ending the tacit relocation of commercial leases.

The doctrine of tacit relocation is one of the issues raised by the Scottish Law Commission in a discussion paper, Aspects of Leases: Termination. 

Although leases may be entered into for a fixed period, tacit relocation requires the serving of a notice of termination before they are actually brought to an end. The presumption is that if nothing is done, parties consent to continue or extend the lease.

In a response to the paper, the Faculty agreed that tacit relocation should be dis-applied in relation to commercial leases.

It created a default position, the Faculty said, and prospective parties to a lease could be ignorant of its existence and 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 dis-application of tacit relocation and its consequences would have the benefit of removing these unwelcome consequential effects,” stated the Faculty.

“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’.”

Another change suggested by the Faculty would be to the commonly used period of notice of 40 days. It was too short, the Faculty believed.

There were various alternatives, such as allowing parties to determine the period of notice, or having different minimum periods in different circumstances.

“However, we consider consistency and minimising possible disputes points to a single minimum period as being preferable, which period we consider should be six months,” said the Faculty.