Farm tenancy succession – a reminder
We at Gillespie Macandrew have been giving a series of talks about the various changes to the law relating to agricultural tenancies, some of which are already in force, and some of which are yet to come in. One of the topics covered in these talks is succession and assignation of tenancies, and it is worth a quick reminder of the changes to the law brought in as a result of the Land Reform (Scotland) Act 2016.
If there is one thing to take from this article, it is that it is now possible to pass on your interest in a secure tenancy to a much wider class of people than you could before. If a tenant dies and his or her interest in the tenancy passes to anyone who is not a “near relative” the landlord had the ability to issue an “incontestable” notice to quit at the next anniversary of the original termination date of the lease, and there was very little that could be done about it. The real problem though was that only spouses/civil partners, children and, latterly, grand-children were classed as near relatives.
Now, under the 2016 Act, the class of persons who are near relatives is significantly extended, and includes, for example, siblings, nephews and nieces, but goes as far as a step-child of the tenant’s spouse’s sibling. If that sounds complicated, it is! But it is good news for tenants because there is a much better chance of there being someone who qualifies as a near relative who can continue the tenancy.
The other point to note is that if a successor is a near relative, then the landlord can only object to the person becoming the tenant on the grounds of poor character, lack resources, or lack of ability. There’s no case law as to what poor character might mean, but it’s unlikely to apply very often. Resources again is unlikely to be a major issue – if the successor is also acquiring the stock, equipment and entitlements that go with the farm they are likely to have the resources to pay the rent and farm the land properly. Ability is therefore the most likely issue, but it can be countered by the successor undertaking a course of training and making arrangements for the management of the farm while they do so.
The 2016 Act has implications in situations where a successor is not a near relative as well. In the past, as noted above, the landlord could issue an incontestable notice to quit to a non-near relative successor, and the tenancy could be brought to an end provided the landlord followed the correct procedure. Under the 2016 Act, the landlord can still issue a notice terminating the tenancy of a non-near relative successor, but the successor now has the ability to apply to the Land Court, within 30 days of receiving the landlord’s notice, to be confirmed as the tenant of the holding “on any reasonable grounds”. Again there is no case law as of yet as to how that might be interpreted, but it appears that the Court has a fairly wide discretion to permit the successor to remain as tenant of the holding.
There are very detailed rules regarding all of this, as well as legal questions around the validity of legacies of farm tenancies. There are also very strict deadlines for the giving of notices, and specialist advice should be sought by anyone either dealing with succession to a farm tenancy or considering what they would like to happen to their tenancy in the event of their demise.Back to news list