Its not unusual for commercial landlords to have tenants occupying premises without a signed lease.  It can happen for a number of reasons.  It may be that the tenant was desperate to take occupation and began trading before the lease was signed.  It could be that a portfolio was purchased where the previous landlord was willing to accept informal occupancy arrangements.  Or a tenant may have taken occupation without the landlord's permission (It can be common in tenant insolvency situations) and continued paying rent, with the landlord none the wiser.

In most circumstances, the fact there is no written lease (And an absence of a signed lease can range from nothing on paper at all, to a fully negotiated lease that requires a signature) does not mean that there isn't necessarily an enforceable lease.  In Scotland, there can be an  unwritten lease for up to a year.  Any longer than that, then writing is needed.  

That can create some unfair consequences.  Take the first example.  If the tenant  entered the premises and began trading after all the terms of the lease (Including its 10 years term) had been agreed, but it just hasn't been signed, why should that lease only be for a year?  Hasn't the tenant personally barred himself from arguing that it is not bound by the lease, by taking possession and performing all of the obligations under the lease?  Couldn't its actions qualify as acceptance of the lease? You would think the answer would be yes, but recent case law tells us that even in these circumstances, the lease can be for no more than a year. 

The same case law tells us that the unwritten lease can tacitly relocate.  That seems odd, given the lease then becomes a lease of two years (Tacit relocation is not a new lease, just a continuation of the lease for another year on the same terms).  The unwritten lease can presumably continue to tacitly relocate until notice to quit is given.  

Its also important to remember that an unwritten lease does not arise out of possession alone.  There needs to be some evidence of agreement (Whether by words or actions) on rent, premises and parties.  Without that, there can be no lease at all.  


Matt Farrell