SCOTLAND ENGLAND

1. SIGNING FORMALITIES

• Are less rigorous in England More formal - e.g. every page of a schedule of condition needs to be signed. o Schedules should be initialled

Contracts and deeds should in most cases be self-proving i.e. be o There is no requirement to sign schedules of condition witnessed. • Agreements / contracts tend to be signed under hand

o which means they are not witnessed

• If you want to take action under an English contract you have to do so 6 years after the cause of action arose

• Transfers and easements are signed as deeds (which means they are also countersigned by a witness) o you can take enforcement action 12 years after the cause of action arose under deeds

• Clients sign contracts in England usually rather than the missive approach in Scotland where solicitors exchange formal letters

2. REGISTRATION

The Register of Scotland is able to register land without the landowner’s • consent (called keep induced registration) to speed up what is on the Virtually all freehold transactions (save gifts) must be registered register. at the land registry

Lease registration occurs when lease terms are greater than 20 years. • Leases in England and Wales over 7 years must be land registered

• Also easements in leases between 5-7 years must be noted

3. FREEHOLD COVENANTS/ OBLIGATIONS

• In Scotland, the equivalent of a restrictive covenant would be a • A covenant is an obligation contained in a deed “real burden” • In England, only restrictive/ negative freehold covenants are • In Scotland, this is possible e.g. in a “deed of conditions”. This generally enforceable against successive owners of the land document can create positive and restrictive obligations and o These are obligations which restrict the landowner from servitude rights. The subsequent transfers of each plot need only taking a particular action on the land e.g. you can’t refer to the deed of conditions for the obligations to bite operate a pub on the land

• Positive freehold covenants (for example, to maintain or to pay any sum of money) do not run with the land so further action must be taken to future buyers are bound o e.g. restriction on title (block on title). These stoppers are generally more effective as a block than a standard security in Scotland in securing a contractual obligation

• Real burdens bind successive owners of the land, but, unlike in England, real burdens can be both restrictive and positive (such as obligations to maintain, insure and pay towards maintenance obligations)

• Note these rules don’t apply to positive obligations in leases which do bind successors / assignees

• South of the border, it is generally not possible to create covenants or rights over land where the burdened and benefited land are owned by the same entity

4. LEASE TERMINATION

• In Scotland the usual position is that you have to serve a notice • In England you don’t need to serve a notice to quit before a tenant to quit 40 days before the lease end date vacates a property

o So even where there is a contractual end date, if the • There is an exception to not needing to serve a notice to quit in parties do nothing to end the lease, the lease will continue England in relation to periodic tenancies for a further year after the end of its natural life. If the lease is for a term of less than a year, for the same period o There are leases which arise where they have not been of the original lease evidenced in writing and landlords have to give sufficient o This is known as “tacit relocation” notice to tenants. Sufficient notice will reflect the rent frequency so if the tenant pays rent monthly, landlords have to give one month’s prior written notice to end the occupation (this assumes the tenant in question doesn’t have security of tenure)

5. SECURITY OF TENURE

• There is no statutory equivalent to the 1954 Act in Scotland • Under the terms of the Landlord and Tenant Act 1954: o a business tenant – can be any business (but note o The Tenancy of Shops (Scotland) Act 1949 permits a exceptions e.g. railway and minerals leases) tenant of a shop to apply to the sheriff court for a 12

month extension of a lease, following receipt of a notice to . who has been in occupation for a minimum of 12 quit. Whether an extension is granted is at the discretion months or of the court. Only a tenant under a head lease may apply to the court o who has the benefit of a lease for a term of more than 6 months

is entitled to be granted a new lease on application to the court, except in certain prescribed statutory circumstances (for example where a landlord wishes to use the building itself)

• It is possible to contract out of this Act. The procedure for contracting out involves a warning notice being served on the tenant who then completes either a statutory declaration, or a simple declaration to confirm that it understands that it will not have rights of renewal at the end of the contractual term. 6. LEASE TRANSFER

• In Scotland, an assignor has no further liability for the tenant • In England this is known as an Assignment. obligations following a permitted assignation o Assignments of leases with over 7 years to run must be registered at the land registry if they are not already

o Assignments of a registered lease must be documented using a Land Registry prescribed TR1 rather than a deed of assignment

• In England virtually all leases apart from energy/ renewables leases dictate that outgoing tenants must guarantee the obligations of incoming tenant by way of an AGA o An AGA is an Authorised Guarantee Agreement and originated from a 1995 statute which sought to change

the old rules where original tenants to lease has continual/ perpetual liability and could be sued for breaches of lease obligation even though the lease had been assigned 4 times since it occupied the property – known as privity of contract

• Privity of contract means that, as a general rule, a contract cannot confer rights or obligations on any person other than the parties to that contract

7. IMPLIED REPAIRING OBLIGATIONS

• Contrast this with Scotland where: • The wording of the repairing obligation and the definition of the o The common law in Scotland places an obligation on a leased property are key elements in determining the extent of the landlord to keep a property wind and watertight obligations to be placed on the tenant

o There is an implied warranty that the premises are • There is no implied repairing obligations placed on commercial reasonably habitable and fit for the purposes of the lease. tenants in England for business premises but note there is for residential leases o Note a tenant’s obligation to repair does not automatically extend to renewal, replacement or rebuilding, nor to extraordinary repairs (such as those due to latent or inherent defects)

o In full repairing leases, these assumptions are displaced by provisions which say that:

. the tenant accepts the premises as being in good and tenantable condition and . fit for the purpose for which they are let

8. QUARTER DAYS

• The modern Scottish quarter days are 28 February, 28 May, 28 • The usual English quarter days are 25 March, 24 June, 29 August and 28 November. The old Scottish quarter days are 2 September and 25 December. The quarter days are the days February, 15 May, 1 August and 11 November traditionally used in leases as the rent payment days

9. LEASE TERMINATION (FOR BREACH)

• In Scotland where subtenant loses all occupancy rights unless • Subtenants in England will generally get relief from landlords there is a “protection agreement” in place with the landowner terminating head lease i.e. subtenants can remain in possession • A landlord in Scotland may find it easier to end a lease for non- of their leasehold premises performance • The breach has to be a material and persistent breach, for the o A landlord has to serve notice on a tenant requiring landlord to succeed in any forfeiture proceedings payment (or remedy of a non-monetary breach), under threat of irritancy • The landlord is restricted from acting unreasonably in relation to o If the tenant fails to pay / remedy the breach within the repairing breaches - a court has some discretion if it is not fair and relevant time limit, the landlord may terminate the lease reasonable in all the circumstances to end the lease

10. COMPENSATION

• A Scottish tenant isn’t entitled to compensation unless stated in • An English tenant may be entitled to compensation for the lease improvements made to the property. This is a statutory right and so it is not possible to contract out of it completely

11. DILAPIDATIONS

• Dilapidations can be claimed if the landlord has suffered loss, • In England, there is a limit on what can be claimed in respect of through the irritancy provisions or by raising court action for dilapidations. Statute limits a dilapidations claim to the cost of specific implement, requiring the tenant to comply with its carrying out the works or the depreciation in the capital value of repairing obligation. In Scotland, the value of damages for the landlord’s interest in the property dilapidations is not limited by statute and would be decided on the same basis as any other breach of contract claim • Dilapidations can be claimed if the landlord has suffered loss, through the irritancy provisions or by raising court action for specific implement, requiring the tenant to comply with its repairing obligation.

12. INSURANCE

• At common law in Scotland a lease will end if the leased property • The insurance provisions of the lease are closely linked to the is destroyed or materially damaged. This is always displaced by extent of any obligations which arise out of the damage or words in the lease destruction of the property. Assuming that it is the landlord who is • The common law rule that the risk of damage to the property obliged to insure, if a lease is silent on requiring the proceeds of passes to the buyer on exchange of contracts or conclusion of any insurance policy to be used to reinstate the property, there is missives applies in both jurisdictions no general obligation to require a landlord to reinstate the property (although there is an exception in certain circumstances, • In Scotland it is standard in contracts for the risk of damage to or in the case of damage by fire). However it would be unusual for a destruction of the property remains with the seller until lease not to expressly include reinstatement provisions completion

• The common law rule that the risk of damage to the property passes to the buyer on exchange of contracts or conclusion of missives applies in both jurisdictions