Terminating a Commercial Lease

Scots Law operates a rather unusual principle in that to bring a commercial lease to an end, at its natural expiry, either the landlord or the tenant must serve written notice on the other. You might think that if a specific termination date is provided for in a lease, then that lease would automatically come to an end without anything further requiring to be done, but that is not the case.

Sometimes a lease will make specific provision for the manner in which written termination is to be effected and if that is the case then those provisions must be followed. In the absence of any such provision the common law position is that the party wishing to terminate requires to give at least 40 clear days prior written notice to the other party. Time should be taken into account for postage so the party serving notice should always allow for an extra couple of days.

If notice is not served in the manner stipulated above, then the Scots legal principle of what is termed “tacit relocation” will kick in and a lease will continue for a further period of 12 months on the same terms and conditions. It is important any written notice is served, and served correctly, otherwise a tenant who wishes to terminate a lease may find himself faced with having to occupy the property for a further year and therefore pay a further year’s rent. Similarly, a landlord who wishes to bring a lease to an end with a view to perhaps increasing rent may, in certain circumstances, be obliged to allow the tenant to continue in occupation for a further 12 months and at the same level of rent.

For more information please email Corra Irwin or telephone 01463 239393.

Disclaimer: The information in this publication is based on our current understanding of the law. It has been produced for information purposes only. Professional advice should always be sought before taking any action.

Macleod & MacCallum cannot take any responsibility for loss incurred through acting or failing to act on the basis of anything contained in this publication.