I previously discussed the circumstances in which land can be taken out of an agricultural tenancy by a landlord for development or other purposes.
This month I want to distinguish between the respective rights a landlord and tenant have under a fully secure traditional agricultural tenancy, and the rights that exist under a short limited duration tenancy (SLDT), limited duration tenancy (LDT) or modern limited duration tenancy (MLDT). The distinction is an important one.
In a secure traditional tenancy governed by the Agricultural Holdings (Scotland) Act 1991, in most circumstances a landlord will only be able to take back ground out of the tenancy if there is a written lease which contains a contractual power on the landlord’s part to do so.
Even then, a tenant can resist the ground being taken out of the tenancy if it can be demonstrated the effect of the removal would be materially prejudicial to the viability of the remainder of the farm.
In an SLDT, LDT or MLDT governed by the Agricultural Holdings (Scotland) Act 2003, the landlord has a statutory right to take back as little or as much land out of the tenancy as they wish, subject to having planning permission for a non-agricultural use. The tenant has no defence on the grounds of material prejudice.
Accordingly, it is very important to identify whether a lease is governed by the 1991 act or the 2003 act. Fortunately, there is a relatively easy test to apply. If the tenancy began after November 28 2003, it will be an SLDT, LDT or MLDT.
There is only one exception. It is possible to enter into a secure traditional tenancy after that date but only if the lease is in writing, states it is to be governed by the 1991 act, and is signed by the landlord and tenant before the start date.
However, a lease can often be created without anything being in writing where a landlord allows a tenant to use land for agricultural purposes and accepts rent from the tenant.
In those circumstances, if the occupation began for the first time after November 28 2003 it will be a fixed duration tenancy; however, if it began before that date it will be a traditional secure tenancy.
As a secure tenancy, because there is no written lease there is no contractual clause allowing the landlord to take ground back out of the tenancy for non-agricultural purposes and the landlord will only be able to take land back by doing a deal with the tenant.
Recently I was asked if a lease was a fully secure traditional tenancy.
The original tenant had a written lease and had taken up occupation in the 1970s.
He had died in 2010. Nothing was done to transfer his interest in his lease, which would have been quite straightforward.
His son took up occupation of the ground, thinking he had followed his father into the secure tenancy.
That wasn’t the case, however.
The old tenancy had never been transferred.
The son had a tenancy but it was a fixed duration tenancy without security of tenure and no restrictions on the landlord’s ability to resume ground, subject to having planning permission.
As always, if in doubt, seek legal advice at an early stage.
Originally published in The Press & Journal