Irritancy is a right available to a landlord to terminate a Scottish lease early because of the tenant's breach of contract. If exercised correctly, the tenant has no right to remain in the premises and no compensation is payable by the landlord to the tenant. It is not for nothing that it has been described as "the most draconian remedy available to a landlord".
To be able to irritate a lease, there needs to be a specific irritancy clause. Where there isn't an irritancy clause, a landlord can only irritate a lease if there are two years of rent arrears.
Once a lease has been irritated, if the tenant refuses to leave, a court order for ejection is generally required – see following blog here. In this respect, the approach in England and Scotland is materially different.
Trigger
The types of circumstances that tend to trigger irritancy can be grouped under three headings:
1. Non-payment of rent (or other monetary sums e.g. service charge) – the period of grace for payment is usually 14 days but occasionally 21 or even 28 days (and sometimes, though rarely, even longer);
2. Breach of non-monetary obligation under the Lease e.g. breach of repairing obligation or breach of use clause; or
3. The tenant suffering an insolvency event.
Material breach required?
Whereas generally under the law of contract, a party who wants to terminate the contract on the strength of another's breach needs to demonstrate that there is a material breach, importantly, there is no requirement for the Landlord to demonstrate materiality to trigger irritancy. So a landlord can terminate for any amount of unpaid rent, no matter how little – see our blog here.
However, for non-monetary breaches, the landlord can only terminate if, in all the circumstances, a fair and reasonable landlord would terminate the lease for the breach. Its not often that a fair and reasonable landlord would terminate a lease for an immaterial breach, and landlord's have traditionally found it difficult to terminate for non-material breaches. We've discussed this in more detail here.
What can a tenant do?
It's apparent that irritancy is a draconian sanction for landlords. But it is a very effective remedy to remove – as a last resort – a tenant who is in breach of its obligations.
That said, there has been a lot of litigation recently where pre-irritancy notices have been challenged on technicalities, and some have been successful – has enough of a warning notice been given? Could the tenant work out what was due? Was the notice sent to the right address? Would a reasonable landlord terminate for that breach? These are all points that have been argued successfully for tenants.
So, if a pre-irritancy notice is received, there is no guarantee it is valid. The question a tenant needs to ask itself is does it want to keep the unit? If it does, the safe approach is to pay the arrears. The riskier approach is to challenge the notice.
If the tenant considers it is not in breach of the lease, the challenge to the notice may seem like the obvious choice. If the tenant believes that only some of the arrears are due, it can pay them and challenge the notice for those it considers are not due. That is a risky approach to take and it is much safer to pay all that is demanded and then challenge liability, but sometimes the size of the arrears means that this is not an option. Sometimes tenants just aren't willing to pay or do what they think is not due. In that case, the tenant needs to speak to a lawyer quickly about raising an interim action to suspend the irritancy process until the court has decided on liability. Timing is everything in that respect.
Future
The question may arise again whether irritancy will be reformed but the Scottish Law Commission's discussion paper into reform of leases in 2018 didn't propose specific amendments. The only means of protecting a tenant's position is to insert protections (e.g. providing for a sufficient notice period and limiting the instances when irritancy will apply) when revising the lease.
Brodies are ideally placed to advise on this – please contact Laurence Douglas, Matt Farrell or your usual Brodies contact if you want to discuss further.
