Are you clear about what is in your lease?

It may seem obvious to state that landlords and tenants of agricultural holdings should be clear about just what land and fixed equipment has been leased to the tenant but recent experiences have suggested that this is not always the case. When a lease has been in place for a long time, as may be the case where secure tenancies are involved, changes can take place which have not been properly recorded and the origin of what was agreed is lost in the mists of time. This can happen when some land is resumed from then tenancy by the landlord on the basis of a verbal agreement with the tenant. This can lead to problems later on in terms of clarifying what is in the lease and whether or not the resumption is legally competent. Knowing what is exactly in the lease is important for all sorts of reasons but there are two circumstances in which it is particularly important.

The Relinquishment and Assignation provisions allow a secure tenant to relinquish the tenancy in return for a cash payment by the landlord or, if the landlord does not wish to buy, the tenant has a year in which to assign the tenancy for value to a new entrant or progressing farmer. The first step in the Relinquishment and Assignation process is a valuation of the tenancy by an independent agent appointed by the TFC. In the cases that I have dealt with so far, it has been surprising to see how many have got off to a difficult start because the extent of the lease cannot be agreed between landlord and tenant. This causes delays in the valuation and risks the valuer being unable to complete the valuation within the timescale set out in the legislation. So, if you are a tenant contemplating Relinquishment, take time to clarify what is in your lease before beginning the Relinquishment process.

The other important circumstance is when a secure tenant is registering a pre-emptive right to buy the holding, should the landlord choose to sell. The current registration process requires a plan of the tenancy to be lodged with Registers of Scotland but some registrations have been difficult or have not been possible because of a dispute between landlord and tenant over the extent of the lease. The Scottish Government had previously indicated an intention to do away with the need for registration in favour of an automatic right of pre-emption but this was not taken forward. The recently published Land Reform Bill now proposes that a review of the registration process should be taken forward and this is much to be welcomed. It has always seemed to me to be unnecessary to register other than a right to purchase whatever is included in the lease at the time that the opportunity to buy arises. This would avoid the need for disputes at time of registration, with much of the time spending arguing proving to be waste of time anyway, if the opportunity to buy never arises.

So, for many reasons, it is important for both parties to be clear about what land and fixed equipment is included within an agricultural lease. It’s worth taking time to go back over files and documents to see if the land currently being farmed does not coincide with the lease plan and any subsequent changes made over the course of the tenancy. This is particularly important with leases that have spanned the generations and where memories of changes made, but not properly recorded, have faded. If necessary, tenants should contact their landlords to confirm that both parties are in agreement over the extent of the lease. Better to sort out anomalies now, than when it becomes an issue that matters.

If you have concerns or questions relating to your lease, you can contact the Scottish Land Commissions TFC helpline. The helpline is open to anyone looking for more information on agricultural tenancy and letting matters. You can get in touch with the TFC helpline by email or phone:  01463 423 300 or tfc@landcommission.gov.scot.