What is tacit relocation?
Tacit relocation is a concept most widely recognised in Scotland in lease law.
It applies when a Scottish property lease comes to its contractual end without either Landlord nor Tenant having first served notice to quit on the other.
Various options for reform of the process have been suggested, however, until these are enacted you must give notice if you want your lease to end at its specified termination date.
By their silence, the parties are presumed to have agreed that the lease should continue on the same terms as originally agreed, except for:
- Duration; and
- Any provisions which would be inconsistent with the extension.
If the original lease was for over one year, the lease will continue for another year; if the original lease was for less than one year, it will continue for the same length as the original term. Tacit doesn’t apply to all leases, but the exceptions are very specific and don’t cover the majority of commercial leases.
To rebut the presumption of tacit, generally speaking, notice of 40 days or more must be given. Different periods do however apply in certain cases and, in particular, a significantly longer period of notice is required for properties of over two acres.
Although it’s not legally required, from an evidentiary point of view it makes good sense to serve written notice.
This all sounds a bit odd, where did tacit relocation come from?
The concept of tacit relocation derives from Roman Law and appears to have been evolved to encourage crop cultivation. Unfortunately, it now operates in the arena of commercial law and doesn’t sit well with modern commercial practice.
Crucially, a Scottish commercial property lease will not contain express reference to tacit relocation, so anyone unaware of this concept will not know that notice is required to terminate the lease at its specified end date.
This has caused issues in practice where tenants have assumed that their lease will end automatically, have entered into a new lease of alternative premises, and have subsequently found out that their original lease has not ended.
As a result, many end up having to pay rent under two leases for a year.
Can I contract out of tacit relocation?
Despite much speculation, there is not yet a definitive answer to this question. Some practitioners now draft opt-out wording into leases, but such provisions have not yet been tested in court.
For the time-being, the safest assumption is that you cannot contract out of tacit.
Proposals for reform of tacit relocation
In 2022 the Scottish Law Commission put forward various proposals for reform of tacit relocation, including:
- Replacing tacit relocation generally with a new statutory system;
- Adjusting the period of notice such that (generally speaking) three months’ notice is required; and
- Making it clear that parties can contract out of the automatic continuation of the lease (and allowing for parties to vary the periods of renewal).
Reform is required but, until then, assume tacit will apply to your commercial lease - irrespective of what it says!