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Is an unwritten lease enforceable in Scotland?

BusinessLease

Is an unwritten lease enforceable in Scotland?

Commercial landlords are not uncommon to have tenants occupy premises without a formal lease. It can occur for a variety of circumstances. It is possible that the tenant was pressed for time and began trading prior to the lease being signed. It is possible that a portfolio was purchased with the understanding that the prior landlord would support informal occupation agreements. Alternatively, a tenant may have taken occupancy without the landlord's permission (which is not uncommon in tenant insolvency circumstances) and kept paying rent undetected by the landlord.

In most cases, the absence of a written lease (which might range from nothing on paper at all to a fully negotiated agreement requiring signing) does not necessarily imply the absence of an enforceable lease. In Scotland, an unwritten lease of up to a year may exist. Any longer than that, writing becomes necessary.

What to consider with an unwritten lease?

This may result in certain unfavourable outcomes. Consider the first instance. If the tenant took possession of the premises and began trading after all lease terms (including the ten-year period) had been agreed upon but the lease had not been signed, why should the lease be for a year? Isn't it true that the tenant has effectively waived its right to argue that it is not bound by the lease by taking possession and completing all of the lease's obligations? Couldn't its acts be construed as lease acceptance? You might assume the answer is yes, but recent case law indicates that even in these situations, the lease cannot exceed one year.

Commercial unwritten lease

The same case law indicates that an unwritten lease may be transferred tacitly. That seems strange, given that the lease then becomes a two-year lease (Tacit relocation is not a new lease, just a continuation of the lease for another year on the same terms). Until notice to quit is given, the unwritten lease may probably continue to relocate implicitly.

Additionally, it is critical to understand that an unwritten lease does not result solely from possession. There must be evidence of agreement (whether verbal or physical) about rent, premises, and parties. 

What constitutes a proper Commercial Lease agreement?

A signed commercial lease agreement should include the following information: your name, your companies name, the address of the property being rented, the start date of the tenancy and specifics on whether or not other companies are permitted to use the property for commercial purposes.

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