CHAPTER TWO – 1991 ACT TENANCIES
The expression “1991 Act tenancy” applies to a range of agricultural tenancies created in a variety of circumstances. Many of these tenancies came into effect long before the enactment of the 1991 Act.
This chapter discusses the defining characteristics of such tenancies and the various ways in which they can be created.
If any lease is to be valid in Scotland there must be agreement on who are the parties to the lease, what property is subject to the lease, the rent payable and the duration.
All these elements must be present before an agricultural lease of any kind can be created. It is worth bearing in mind that rent need not be paid in cash and it is possible to argue that services rendered or any other kind of non-cash payment form a “consideration” equivalent to rent.
An agricultural lease need not be in writing and whereas an unwritten lease would not be binding on successors in the general law, agricultural leases enjoy the protection of the 1991 Act.
The Act applies to agricultural holdings which are defined as the aggregate of agricultural land comprised in any lease which is not related to the tenant’s continuation in any office, appointment or employment held under the Landlord. Agricultural land is defined as land used for agriculture for the purposes of a trade or business. This is an important distinction and means that land used for the rearing of animals kept as pets can never create an agricultural tenancy. The definition refers to the agricultural use being for the purpose of a trade or business but there is no requirement for the trade or business to be run to any particularly high standard nor indeed to be profitable.
S3 of the 1991 Act creates the element of security of tenure which is the hallmark of a 1991 Act tenancy. The tenancy of an agricultural holding does not end at the termination date but continues by tacit relocation for another year after the stated termination date and from year to year thereafter unless the Landlord has served a notice to quit or the Tenant has served a notice of intention to quit.
The circumstances in which the Landlord can serve an incontestable notice to quit are extremely limited, see Chapter 14. The right of the tenant to bequeath the tenancy or the right of the executors of a deceased tenant to nominate an acquirer on intestacy mean that this security of tenure can continue through many generations of the Tenant’s family.
There are a number of methods for creating 1991 Act tenancies. The law prior to the enactment of the 2003 Act is still relevant to the vast majority of 1991 Act tenancies in existence.
Before the enactment of the 2003 Act, a 1991 Act tenancy could be created in some of the following ways. This is not an exhaustive list –
The Landlord and the Tenant intended the 1991 Act to apply to the lease and entered into a written lease after the 1991 Act came into force.
The Landlord and the Tenant entered into a lease which was governed by the legislation prior to the 1991 Act, but the 1991 Act now applies to that lease
The Landlord leased an agricultural holding to a Tenant prior to 27th November 2003 but there was no written lease
The Landlord and the Tenant entered into a lease of grazing land and, prior to 27th November 2003, the Tenant’s actings took the arrangement outwith the limited scope of the now repealed s2 of the 1991 Act. This could be for example by the Tenant growing a crop on the land or staying in occupation for more than 364 days. A 1991 Act tenancy would thereby be created by default.
Following enactment of the 2003 Act, 1991 Act tenancies can only be created under s1 of the 2003 Act which contains two main provisions –
any new 1991 Act tenancies entered into must be in writing and
must state that the 1991 Act applies to the tenancy.
These provisions mean it is no longer possible for a 1991 Act tenancy to be created where there is an unwritten lease or a failed grazing lease. In both of these scenarios the default position is now the creation of a Short Limited Duration Tenancy (see chapter 3) because a 1991 Act tenancy must be in writing and state that the 1991 Act applies.
S1 of the 2003 Act goes on to state that the tenancy of an agricultural holding entered into before 27th November 2003 to which the 1991 Act applied was henceforth to be known as a 1991 Act tenancy, regardless of the date when the lease was entered into
There are now fewer than 5,000 1991 Act tenancies in Scotland.