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Contracting out - ‘term of years certain’ |
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LTA 1954 gives T a statutory right to renew its business tenancy at the end of the term. However, L and T can contract out of that right provided the tenancy is going to be for a ‘term of years certain’. Typically, this will be a fixed-term lease, or a fixed term with a break clause. A lease will not be for a ‘term of years certain’ if it is granted for a fixed term and then from year to year, or if it is granted for a fixed term with ‘any continuation, extension or holding over’.
Because of this requirement it is vitally important the definition in the ‘term’ in the lease should not include any ‘continuation’ of the term. This has been illustrated by a recent case where the term of the lease was for a specified fixed period, including ‘any period of holding over or extension of it whether by statute or by common law or by agreement’. What this meant, in the CA’s view, was that it was no longer a ‘term of years certain’ (instead, it was a fixed term plus any period of holding over or extension). That being so, the contracting out agreed to by T was null and void.
The message is clear: if you are acting for L on a contracting out, then
double-check that you have not defined the term as including any
continuation of the term. Any ambiguity to that effect should be avoided - otherwise, the contracting out procedure will be ineffective (and you
will probably end up with a professional negligence claim against you). LB of Newham v Thomas Van Staden [2008] EWCA Civ 1414 (access free at www.practicalconveyancing.co.uk). © Practical Lawyer
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January 2009 |
