Fortunately for the landlords and their lawyers, in this case, the court adopted a negative opinion of a tenant who was trying to evade a valid contractual process. The Court of Appeal ruled in favour of the owners after referring to both the legal context and the actual wording of the 1954 Act, as amended. Earlier this month, the High Court rendered its judgment in TFS Stores Limited v. The Designer Retail Outlet Centers (Mansfield) General Partner Limited and Others, which examined whether a number of leases under the Landlords and Tenants Act 1954 had actually been entered into. A commercial tenant had argued in a dispute involving multiple tenancies that the exact date should be included in the declaration signed by the tenant when he withdrew from the law. However, the Court of Appeal upheld a decision of the High Court and ruled that less precise wording such as “the date on which the tenancy is granted” or “a date to be agreed between the parties” was sufficient for the purposes of the legislation. According to the 1954 act, a commercial tenant is automatically entitled to a new lease after the expiry of his existing lease. This is the case unless the tenant and landlord agree to withdraw by following the procurement procedure provided for in the 1954 Act and the Regulatory Reform Ordinance 2003 (the 2003 Ordinance). These require the landlord to first send the tenant (or to a person authorized by the tenant to accept the termination) a notice in the prescribed form before the tenant is contractually bound to the conclusion of the lease and confirm that the tenant is not entitled to a new lease at the end of the tenancy period. The tenant must then swear an affidavit in the prescribed form (or a simple statement if it takes more than 14 days between the delivery of the notice and the tenant`s contractual obligation to enter into the lease) before independent counsel or an affidavit) to recognize that the lease is entered into under the provisions of the Protection of Property Act, 1954. The court took a practical approach in this regard.
The purpose of determining the effective date of the term was to enable the person making the declaration to identify which tenancy was to be excluded from the protection of the 1954 Act. The form of the statutory declarations used is therefore `essentially` determined in the form provided for in the 2003 Regulations. A fixed date of entry into force was not absolutely necessary and the forms used in the declarations to identify that date were acceptable. Although the s.38A procedure is a very useful device for the owners, it must be carried out with care and attention, both in terms of communication and explanation as well as the form of the lease. Since exclusion has a significant impact on a tenant, there is a possibility of measures to call into question the validity of the procedure carried out. In that case, the High Court ultimately concluded that the leases had been validly concluded, and this approach confirms current market practice. Among other things, the 1954 Act gives tenants the automatic right to a new lease at market rents after the existing lease expires, unless the landlord can object to it for certain legal reasons such as redevelopment intentions, the fault of the tenant or the landlord who wants to occupy the premises. Tenants would therefore have had this automatic right of renewal if the court had found that the contract wording of the 1954 Act was inadequate. The 1954 Act is the most important commercial lease act in England and Wales.
The decision, which was delayed by almost a year due to the Covid-19 pandemic, was therefore eagerly awaited by landlords and tenants. The Court`s decision is important because it supports current market practices as regards the procedure for awarding contracts. It would be impractical if notices could not be given to the tenant`s lawyer, although it could be argued that it would be good practice to ask the tenant`s lawyer to confirm that he or she has the authority to accept service of the notice on behalf of his or her client in order to avoid suggestions to the contrary. Similarly, it would be difficult and, in some cases, impossible to obtain absolute confirmation that the person issuing the relevant declaration has the authority to do so by the tenant company. The Fragrance Shop, a major national perfume retailer, entered into leases in six designer stores and, in each case, the subcontracting procedure was followed. TFS focused on three themes in the outsourcing process: The Fragrance Shop (TFS), a large perfume retail operator with more than 200 stores in Germany, entered into leases in six designer sales centers and, in each case, the subcontracting procedure was followed. After the leases expired and the owner`s decision not to renew the business, but to lease it to a competing perfume merchant, TFS attempted to prove that the six leases were protected by the 1954 Act. The court reviewed the tenant`s lawyers` advance and concluded that they were acting as their client`s representatives. The power of the tenant`s lawyers to accept the warning “resulted” from the nature of their instructions, who should do everything necessary to enter into a lease in accordance with the agreed terms. The clauses explicitly stated that leases were to be effectively excluded from the protection of the 1954 Act.
Whether the lawyers` authority was express or implied was not relevant (in the Court`s view) for those purposes and, in any event, the Court was satisfied that the lawyers would clearly have had the power to accept the communications. 3. The rental agreement must contain a note relating to the termination of the lessor and the declaration of the lessee, as well as the agreement of the parties that the relevant provisions of the 1954 Act will be excluded from the lease. Whether or not a lease should have the 1954 property guarantee is an important consideration for the parties when granting a new lease, as the landlord may want to retain the ability to select its tenants, while the tenant may need to protect its position in the market, which can be closely related to its location. A number of factors can influence the decision, including the bargaining power of the respective parties, the economic climate and future business plans. The decision must be made with the appropriate legal advice. Under Part II of the 1954 Act, if the tenant has occupied a property for the purpose of carrying on business, he or she would normally have the legal right to extend the tenancy at the end of the lease. However, the parties may, subject to following the correct procedure (explained below), agree that this “security of ownership” is excluded, which means that the tenant is not legally entitled to a renewal lease at the end of the rental period and therefore cannot apply to the court for an extension lease if he is unable to agree on the terms with the landlord. Unless a commercial lease is entered into through the section 38A mechanism, the 1954 Act automatically gives the tenant the title guarantee, which protects the tenant`s right to continue using the premises and his right to grant a new lease after the expiry of the existing lease.
When these leases expired, the owner decided not to grant extensions, but to lease the business to a competing perfume merchant. The Fragrance Shop attempted to determine that the six leases were protected by the 1954 Act. Home > Real Estate News> Has your lease under the 1954 Act actually been entered into? Owners can breathe a sigh of relief 2. The tenant makes a simple or legal statement to recognize that he understands the consequences of entering into a contract. A simple declaration can only be made if the tenant has received the warning at least 14 days before the rental contract is issued. The Article 38A mechanism was introduced in 2003 (amending the procedure established in 1954) and allows the parties to agree that a lease excludes the safety of tenants. .