Landlords are increasingly taking a dim view of tenants who fail to adhere to the various notice provisions within a lease, particularly where a tenant is seeking to terminate a lease either through the use of a break clause or prior to the expiry of the lease. It is therefore vital that tenants are not only aware of the various notice periods within a lease, but also the potential pitfalls of failure to comply with them.
Careful examination of express notice provisions within a lease is paramount. A common pitfall arises where a lease simply provides for “six months notice” to be given. Judicial precedent provides that this is to be interpreted strictly, meaning exactly six months notice is to be given. Any notice issued prior to this date would be invalid. Thus, a vigilant tenant should ensure that the lease provides for a period of not less than six months notice, allowing any notices to be competently served at any time prior to the expiry of the relevant period.
In the absence of express provision within a lease, the Sheriff Courts (Scotland) Act 1907 prescribes certain statutory notice periods for termination, depending on the duration of the lease. These are:
- 40 clear days’ notice where the lease is for four months or longer;
- One third of the term of the lease (subject to a minimum of 28 clear days), where the lease is for less than four months;
- At least one year and not more than two years’ notice where the lease is of more than two acres of land and for a period of three years or longer, and;
- Not less than six months notice where the lease is of more than two acres of land and for a period of less than three years.
Emphasis must be placed upon the term “clear”, as this has the effect of extending the period of the notice to 41 days in practice (which may be further extended by lease prescribing an additional period to allow for service of notices). Thus, a prudent tenant would avoid serving a notice exactly 40 days prior to the termination date so as to avoid the possibility of it being constituted as invalid.
The consequences of failing to adhere to the terms of a notice period can be significant. Failure to serve notice timeously can at best, result in the lease continuing for a further year (by virtue of tacit relocation) or at worst until the termination date provided for in the lease. Consequently the tenant will be subject to all the obligations under the lease, including that of paying rent. An extreme example is that of a recent client failing to fully adhere to the notice period provided within a break clause. To remedy this, the client required to pay £200,000 to secure early termination of their lease, a payment which could have easily been avoided should notice have been given on time.