Security OF Tenure - Real Estate Notes PDF

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SECURITY OF TENURE What is security of tenure?

Security of tenure is when business tenants may remain in a property beyond the contractual expiry date of their less.

When would the landlord be able to end the lease?

The landlord would only be able to end the lease if a ground in the Landlord and Tenant Act 1954 applied.

When does the Landlord and Tenant Act 1954 apply?

1) There is a tenancy, whether fixed or periodic. (Not a tenancy excluded by s.43 LTA) 2) The tenant is in occupation (so he hasn’t sub-let) and; 3) Tenant carried on a business in the property N.B Business is widely defined under section 23 LTA including sports clubs, charities etc but not Sunday schools.

What does s.43 LTA exclude?

How do you terminate a tenancy with security of tenure? (3 possible options)

Tenancies at will, agricultural holdings, mining leases, service tenancies (caretakers etc), a fixed term tenancy for fewer than 6 months (with no option to renew) and tenancies that have been contracted out of the LTA. N.B “contracted out” means that there is wording in the lease to exclude security of tenure. To enter such a lease, the landlord must serve a warning notice on the tenant at least 14 days before the start of the lease, and then the tenant must sign a declaration that he has received and understood it. Or if time is short, the tenant must make a statutory declaration before a solicitor, that the tenant received the warning and understands the consequences. 1. Landlord serves notice on the tenant under s.25 LTA in a statutory prescribed form, stating that the tenancy will terminate on a specified date (STD) in 612 months and that: a) Landlord will not oppose tenant’s application for a new tenancy – but may wish the old lease to be brought to an end so that a new one can be created in which a higher rent can be set and guaranteed – here either party must apply to the court for a new lease after s.25 is served, but on or both the STD; or b) L will oppose tenant’s application for a new tenancy, and state what his grounds for opposing are. In this either party can make an application to court: (i) If landlord applies to court under s.29(2) LTA, then T will need to challenge it – otherwise tenant will lose the right to

renew. If tenant applies to the court for a new tenancy under s.24(1) LTA, then the landlord would need to challenge it. (iii) Either party can apply any time after the landlord serves the s.25 notice, up to the day of the STD at the latest – unless extensions are agreed in writing between the parties before the STD. 2. Tenant serves notice on landlord under section 26 LTA  Terminating the current lease and requesting a new one;  Must be in a statutory prescribed form; and  6-12 months before the specified commencement date (SCD) of the new lease, which cannot be before the contractual expiry date (CED), but can be after (the notice can even be sent after) a) The landlord can serve a counter notice within 2 months of T making the s.26 request if he intends to oppose, including the grounds for opposing. If the landlord does not serve a counter-notice he cannot apply to court. b) The parties can then apply to court – tenant can apply for a new lease (s.24(1)) and the landlord can apply for an order than no new lease be granted (s.29(2)). The application can be made: i) Any time after landlord serves a counternotice; or if landlord fails to do so; ii) After 2 two months have passed following service of the s.26 request; but in any event iii) By the day before the SCD. (ii)

The deadline and the SCD can be extended by agreement between the landlord and the tenant before the SCD. Why would a tenant want to end the lease, rather than simply have the LTA protection to hold over beyond the CED?  If rents in the area have fallen and it wants to renegotiate the lease terms, or if it wants to do anything with its lease where it needs to be certain how long it will continue for – such as improvements or assignments. N.B. It is always best to apply to the court after a s.25 or s.26 notice has been served even if it appears amicable, because the application can always be withdrawn when the new lease is agreed. - It makes it a good fallback position before the tenant, as

the court can step in if the parties cannot agree the terms. It is also a good idea to agree in advance to extend the deadline for the court application if more time is needed for negotiations. 3. Tenant serves notice on the landlord under section 27 LTA.  Terminating the current lease but not requesting a new one; and  Does not have to be in a prescribed form.  This must be served on the immediate landlord, not the competent one.

How to serve a S.25 or S.26 notice in the correct form?

How do you calculate the dates?

What is a competent landlord?

N.B The tenant can simply hold over, so this is for situations where the tenant wants to continue past the CED for a short time – a s.27 notice must be served at least 3 months before the date on which the tenant wishes to leave. A tenant who has already served a s.27 cannot later serve a s.26 notice. The notice should not contain errors, the notice will only be valid if any errors are so minor that the notice is still sufficiently clear to leave a reasonable recipient in no reasonable doubt as to the terms of the notice.  Would need to check the provisions of the lease re valid methods of service.  The notice will also be deemed served at the time it is served personally, or left at the last known place of business or has been posted with a registered delivery.  If the lease is “from and including” or “commencing on” [a certain date] then the lease will start on that date and end on the day before the relevant anniversary.  If the lease is ‘from’ [a certain date] it will start the day after that date, and end on the exact anniversary of that date.  The STD/SCD is then on the anniversary of the date it was served, e.g. a s.25 notice served on 1 July 2014 can have a STD on the 1 January 2015 at the earliest. A competent landlord means they are either the freeholder or the next landlord up the chain with a superior tenancy due to end in 14 months or more. - A competent landlord is not necessarily the immediate landlord....