What is Tacit Relocation?
- The principle of Tacit Relocation is asserting that commercial leases do not automatically conclude at their expiration date.
- The Lease can only be brought to an end by either party by serving notice to quit
By not serving notice, the landlord and the tenant are presumed to have agreed that the Lease should continue on the original terms except for:
- Duration; and
- Any provisions which would be inconsistent with the extension.
For leases exceeding a year, tacit relocation ensures automatic continuation for another year. Conversely, leases shorter than a year automatically renew for the original term.
Insights into Tacit Relocation in Scots Law
- Tacit relocation is ingrained in every commercial lease by default.
- A notice to quit is mandatory if either party wishes to cease the lease post-expiration.
- The standard practice in Scotland involves providing 40 clear days' notice to prevent automatic renewal via tacit relocation.
- Failure to serve notice leads to the lease continuing with the same terms, typically for another year through tacit relocation.
Special Considerations for Leases Exceeding Two Acres
Be wary, as different rules apply to leases larger than two acres, such as expansive car parks or warehouses with land. According to the Sheriff Courts (Scotland) Act 1907, a notice of no more than two years and no less than one year is required to conclude such leases.
In essence, commercial leases larger than two acres deviate from the norm, necessitating landlords and tenants to be mindful of the distinct notice period—40 clear days for standard commercial properties and a one-year notice period for those larger than 2 acres.
Proposed Reforms by the Scottish Law Commission for Tacit Relocation
The Scottish Law Commission has put forth comprehensive proposals for the reform of tacit relocation:
- Replacement of tacit relocation with a new statutory system.
- Adjustment of the notice period to three months.
- Clarification to parties that they can opt out of tacit relocation, allowing for variations in renewal periods.
Seeking Advice from Solicitors
It is important that commercial property landlords or tenants are aware of the implications of tacit relocation and how the termination date of a lease does not mean that the Lease automatically comes to an end, due to Tacit Relocation.
When it comes to commercial property leases, we understand that the process of termination or continuation can be complex and challenging. Therefore, we recommend seeking professional legal advice to ensure that all legal requirements are met, and your interests are protected. Our team of experienced Commercial Property solicitors are here to assist you in reviewing your lease and guiding you through the legal process with diplomacy, ensuring that you are fully informed and comfortable with every step. We are committed to finding the best solution and are here to offer our support. We invite you to contact us now to discuss your requirements on {{CONTACT_NUMBER}}