Real Estate - Tip Of The Week: Contracting Out Of The 1954 Act

Where it is agreed between the parties that a business tenant will not have a right to renew its lease at the end of its term it is imperative that the statutory process excluding this right is precisely followed. If it is not, a tenant might be able to argue that it is entitled to a new lease.

The High Court has recently provided some helpful guidance on the practicalities of contracting out. In the case a tenant tried to argue that, because of technical defects in the contracting out process, it was entitled to a new tenancy in circumstances where its landlord wanted to secure vacant possession at the end of the fixed term of its lease.

The court held:

The tenant's solicitor had actual or apparent authority to do everything necessary to bring to completion a transaction reflecting the heads of terms. This meant that the solicitor could accept the statutory warning notice as agent.

The statutory declaration used as part of the contracting out process was not defective. It was sufficient that it had been given by a non-statutory director of the tenant as he had actual or apparent...

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