Senior associate solicitor Gemma Smith, in our Commercial Property team, answers five common questions relating to security of tenure.
What is security of tenure and “contracting out”?
Where a lease does not benefit from security of tenure, there is no statutory right for the tenant to renew the tenancy when the contractual term expires. The lease is therefore said to have been ‘contracted out’ where one of two procedures have been strictly followed, both of which involve the landlord serving a warning notice on the tenant (or guarantor, if applicable) prior to completion.
It is extremely important from a landlord’s perspective to ensure that the procedure to serve the notice has been correctly carried out otherwise the tenant may inadvertently acquire security of tenure.
What is the procedure?
The landlord must serve a warning notice to the tenant, stating that security of tenure will not apply to the lease and warning the tenant of rights being given up.
Following receipt of the notice, the tenant must either sign and date a simple declaration or swear a statutory declaration to declare that it has received and read the landlord’s warning notice.
A simple declaration is only valid if the landlord’s warning notice has been served at least 14 days before the lease is completed.
Many landlords prefer the tenant to swear a statutory declaration to eliminate any potential requirements to prove that service of the notice took place at least 14 days prior to completion and providing evidence to support this. It also means that the matter can be completed imminently rather than waiting 14 days.
How are the contracting out documents served?
Whilst it is not necessary for the landlord’s warning notice to be served in any particular way, many law firms will often have a blanket exclusion to accepting service by e-mail. To avoid completion being dictated by the post (or, indeed, by postal strike dates as we saw earlier this year), the respective solicitors may opt to issue and, where duly authorised to do so, accept service of the warning notice via e-mail for convenience, clarity and speed.
Where a tenant is not represented or service by e-mail is not acceptable, alternative options include leaving the notice at, or sending it by recorded or special delivery to, the person’s last known place of abode (being the place of business or registered office address).
Can the tenant take their statutory declaration to their own solicitor?
The statutory declaration must be taken to an independent solicitor (who also does not act for the landlord) or commissioner for oaths to have sworn and a standard fee is payable. On the contrary, a simple declaration is just signed and dated by the tenant.
Are there any top tips?
To prevent the matter being delayed, we would recommend that the transaction is dealt with in a timely manner and with sufficient time being left between serving notice and any proposed completion deadlines.
If the above is not possible then the parties should take into account weekends; consider hand delivery; courier services; or sending documentation via secured and tracked delivery, retaining proof of postage and/or signature.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
