I have recently been involved in two agricultural tenancy disputes, the circumstances of which were remarkably similar. There are some important lessons for agricultural tenants that I’d like to highlight as a result of both cases. Each ended up in the Scottish Land Court although they were eventually resolved without the Court having to make a decision.
In each case, land had been the subject of a tenancy within each family for more than 30 years. There were no written leases in either case and although the origins of each were lost in the mists of time, both were likely to have begun as grazing leases, which had transformed into fully secure agricultural tenancies simply by the tenant remaining in occupation and continuing to pay rent.
An important reform introduced by the Agricultural Holdings (Scotland) Act 2003 was to the effect that where a grazing tenant remained in occupation after the end of the grazing tenancy after 28 November 2003, this did not create a fully secure tenancy. Instead, a fixed duration tenancy was created with the landlord being able to recover vacant possession at a future date. However, in the cases that I was dealing with, the grazing leases had come to an end many years before that. This meant that the grazing tenant in each case had acquired a fully secure traditional tenancy by operation of law.
In each case, the original tenant died and in one a son and in the other a daughter simply took over the reins from their father and continued in occupation paying rent. Legally, it is perfectly possible for the tenant’s interest to be inherited by the next generation. However, it is impossible for this to happen unless proper legal procedures are followed. Either the tenant must leave their interest in the tenancy to a particular beneficiary in their will, who must serve a notice on the landlord within 21 days of the death, or the executors of the deceased tenant must confirm to the tenant’s interest and transfer it to a suitable beneficiary within the first year of the death. In fact, in practice, it is only unwritten agricultural tenancies that are capable of being left in someone’s will because most written leases prohibit the tenant from being able to do so. If either of these procedures aren’t followed, the original tenancy comes to an end on the first anniversary of the previous tenant’s death.
In both cases, unfortunately, the proper legal procedures hadn’t been followed. This created a huge and unsolvable problem for the two children. In each case, their father had died after the coming into effect of the 2003 Act. By occupying the land and paying rent, each child had created a tenancy in their favour by operation of law, but each tenancy was a fixed duration tenancy without security of tenure and was capable of being brought to an end.
The lesson to be learned from a tenant’s point of view is that it is essential that proper procedures are followed to transfer a deceased tenant’s interest in the tenancy on to the next generation. If this had happened in each of the cases that I was involved in, unfortunately too late to be able to resolve this specific issue, the previously existing secure tenancy would have continued for the benefit of the deceased tenant’s family, rather than being lost.
For more information please contact Hamish Lean, Head of Rural Property and Business, at hamish.lean@shepwedd.com.