Faculty confirms its position on tacit relocation of commercial leases

THE Faculty of Advocates has again voiced its support for ending the tacit relocation of commercial leases in response to a consultation on the draft Leases (Automatic Continuation etc.) (Scotland) Bill.

The doctrine of tacit relocation was among issues raised by the Scottish Law Commission in its discussion paper, Aspects of Leases: Termination, published in May 2018.

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 its response in 2018 to the discussion paper the Faculty agreed tacit relocation should be dis-applied in relation to commercial leases.

Its response and those of other organisations commenting on the discussion paper were used by the Scottish Law Commission to develop its proposals for reform of this area of the law, and reflected in its consultation on the draft Leases (Automatic Continuation etc.) (Scotland) Bill.

Faculty stood by its original position that tacit relocation of commercial leases created a default position and that prospective parties to a lease could be ignorant of its existence and consequences. Dis-application 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 desired, said Faculty.

The current default periods for the giving of notice with regards to commercial leases are 40 days for leases of four months or more and a third of the duration of the lease for leases of under four months, with a minimum of 28 days’ notice. No notice appears to be required for leases of 28 days or less.

The draft Bill would introduce 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.

The Faculty’s full response can be viewed here