Choose your friends wisely, choose your co-tenants very carefully: joint tenants and the private residential tenancy

Choose your friends wisely, choose your co-tenants very carefully: joint tenants and the private residential tenancy
2018-09-06

The Scottish Government guidance note Private Residential Tenancies: Information for Tenants (published 26 April 2017 ) correctly summarises the state of the law in relation to Private Residential Tenancies (PRTs) under the Private Housing (Tenancies) (Scotland) Act 2016 when it states

 “To end a joint tenancy, all the joint tenants must agree to end the tenancy and sign the notice to leave. One joint tenant cannot terminate a joint tenancy on behalf of all the joint tenants.” 

Dr Douglas Bain and Mitch Skilling here unpick some of the issues arising out of this text.

Section 44 of the Private Housing (Tenancies) (Scotland) Act 2016 specifies that ‘[a] tenancy which is a private residential tenancy may not be brought to an end by the landlord, the tenant, nor by any agreement between them, except in accordance with this Part’. 

In brief, the tenancy may be brought to an end by the tenant giving the landlord a notice which fulfils certain statutory requirements, or by the landlord giving a notice and the tenant leaving failing which the landlord’s making successful application to the First-tier Tribunal for an eviction order.  As the advocate Adrian Stalker observed (in an issue of SCOLAG) during the Bill stages of the Act  “[t]his seems to rule out various ways in which a tenancy may terminate at common law, say by renunciation, the parties entering into a new agreement, the operation of a break clause, total or partial destruction of the subjects, and so on” (to which might possibly even be added confusio in the property sense, but that’s another story for another day).

‘Tenant’ is defined for the purposes of s.1 of the 2016 Act as encompassing as individuals any and all of two or more joint tenants, but this is expressly in respect of s.1(1)(b) and 2(3) only. It is defined in the rest of the Act by s.78, with s.78(3) establishing that references to the tenant are, in cases of joint tenancies, to all of the tenants unless stated otherwise (for example, it is stated otherwise in sections 14(5), 16(6), 32(3) and in others). The same rules apply to references to the landlord under s.78(2).

The tenant’s ability to bring a tenancy to an end is covered in ss.48 & 49 of the Act. The word ‘tenant’ is not qualified here, so the definition in s.78(3) must apply, meaning, in the case of joint tenants ‘all of those persons’ (i.e. all of the co-lessees) must give the notice. 

On the other hand, any one of a plurality of co-lessors may issue a notice to leave (see s.62(2), which disapplies the s.78(2) definition in this case) and thereafter apply to the First-tier Tribunal (see s.52).

Thus, in a joint tenancy all of the tenants must agree to give notice yet in a case in which there are a number of joint landlords any one of that plurality of co-lessors may independently give notice and apply to the First-tier Tribunal.

The position stated in Rankine Leases (3rd ed, 1916) at pp.82-83 (see also Paton & Cameron, Landlord and Tenant (1967) at p.56) is that at common law, in seeking a removing all of the co-lessors must concur.  Rankine identifies some exceptions to the rule, the main one of which being that ‘this defence would not be listened to if tendered by a mere squatter, occupying without semblance of right.’  (The ‘mere squatter’ exception is discussed in Morris v Eason [2012] CSOH 125; 26 July 2012.  See also this note in the Journal of the Law Society of Scotland).

The rationale behind Rankine’s rule of unanimity is best explained by reference to Erskine in his Institute at II.vi.53:

A proprietor who has no more than a joint interest with others in a land estate, pro indiviso, cannot by himself remove tenants from his part of the land, without the concurrence of the joint proprietor, as long as the land is undivided; because every inch of the ground belongs to both proprietors, pro indiviso, in determinate portions; and consequently, it is impossible for the tenant to remove from the share of the lands belonging to the pursuer in the removing, without also removing from that which is vested in the other proprietor; to which the law cannot compel him, unless that other concur in the suit. 

In respect of co-lessees, Paton & Cameron have it, on the authority of Smith v Grayton Estates Ltd. 1960 S.C. 349, that at common law the notice of one co-lessee is sufficient to exclude tacit relocation and terminate a lease (see Landlord and Tenant at p.225-226; also Rennie, Leases (2015) at p.150).  There are then questions in respect of what might happen if the co-lessors did nothing in response to the notice and the remainder of the co-lessees sat tight, but these are plausibly answered by QC Jonathan Mitchell in his Eviction and Rent Arrears (electronic edition, 2003) at p.36:

One of two joint protected tenants gives notice and leaves. This terminates the contractual tenancy (Smith v Grayton Estates, 1960 SC 349) and the remaining tenant thus becomes a statutory tenant. Years pass. There is no further communication between the landlord and the statutory tenant other than the payment of rent. Court action for recovery of possession can be taken without any further warning. If, however, over the years, the rent had been increased by agreement, the landlord might find it difficult to dispute that a new contractual tenancy had been entered into so that notice to remove was required.

The Rent Act and Assured tenancy regimes preserved a distinction between contractual and statutory tenancies (see Rent (Scotland) Act 1984 s.3 and Housing (Scotland) Act 1988 s.16), however, like the Scottish secure tenancy under the Housing (Scotland) Act 2001, the PRT is a statutory tenancy from day 1. Thus, whilst Paton & Cameron may suggest at p.226 that notice by one of several co-lessors would exclude tacit relocation, tacit relocation and even the concept of the ish (that is to say, a planned date of departure) are largely irrelevant considerations in relation to PRTs under the 2016 Act, which gives rise to what might be termed an ishless tack.

One of this article’s co-authors is able to remember from his Shelter Scotland Housing Aid Worker days (1987-2003) situations arising in respect of council tenancies (the modern terminology is social rented sector, now including the housing associations) and relationship breakdown cases, where A and B might be joint tenants, with, following a relationship breakdown, party A leaving the house.  Party A might wish to obtain new accommodation from the council, but A meantime had their name on an existing lease, and remained jointly and severally liable in respect of that Housing (Scotland) Act 1987 secure tenancy.  Under s.46(2) of the H(S)A 1987 the ‘tenant’ could give four weeks’ notice of termination to the landlord, but under s.82 ‘tenant’ meant all of the joint tenants’ – i.e.  the same position as under the 2016 Act.  It took statute to change that position in respect of the 1987 Act – see s.12 of the H(S)A 2001: “A joint tenant under a Scottish secure tenancy may bring to an end that tenant’s interest in the tenancy by 4 weeks’ notice given to the landlord and each of the other joint tenants under the tenancy.”  That was, in fact, one of a number of changes that Shelter Scotland successfully lobbied for during the bill stages of the 2001 Act legislative process.

The practical upshot of the pre-2001 position was that co-tenant A could not come off the lease.  Co-tenant B remained in possession of the subjects, with rent arrears accruing (these may have existed before the separation or accrued since it - Housing Benefit problems were a frequent cause).  A in this position might have a right to housing as statutory homeless, but the council’s policy in such cases might be to say “yes, we’ll make you an offer but it will be in a [what might now be called a Scottish Index of Multiple Deprivation most deprived 5-20%] area.”  But if A was willing to pay off in full any arrears and B was amenable, the Council would accept a joint termination and grant a new sole tenancy to B, with A being allocated housing in an area more acceptable to her or him.  Indeed, a termination might not even be required, as the process might be achieved by means of novation.

The pre-2001 social rented sector definition of ‘tenant’ is mirrored in the assured tenancy regime under the Housing (Scotland) Act 1988 at s.55(3) – “Where two or more persons jointly constitute either the landlord or the tenant in relation to a tenancy, then, except where otherwise provided, any reference in this Part of this Act to the landlord or to the tenant is a reference to all the persons who jointly constitute the landlord or the tenant, as the case may require.”  The Rent (Scotland) Act 1984 is silent on the matter. In respect of ‘tenants’, then, the 2016 Act is consistent with its immediate residential private rented sector predecessor and with Rankine and Paton & Cameron. 

This might all seem quite abstract and remote, so perhaps a practical illustration would assist.

Co-lessees X, Y and Z rent a property from co-lessors U and VY and Z are in Year 4 of their Law studies at Aberdeen University, with X being in Year 3.  U and V co-own the subjects of the lease and are in a relationship which has been going through a rough patch. 

For reasons that one cannot even begin to understand, Y and Z wish to do their Diploma in Professional Legal Practice at another university, whereas X wishes to stay on in the flat to the end of her degree and Diploma studies. Under the 2016 Act Y and Z may not give notice so as to terminate the tenancy. They may decamp but they will remain liable on the lease. The tenancy remains a PRT (per ss.1(b) and 2(5) of the 2016 Act) but the landlords will have a mandatory ground for possession (per s.51, Sch.3 part 3 ground 10 and s.78(2) of the 2016 Act). Being unable to give effective notice Y and Z will have to find sub-tenants or assignees (more likely the latter) who would be acceptable to the landlords.

In a sense, this is no different to the position as stated in Rankine and Paton & Cameron. It is the 2001 Act amendment in respect of tenancies in the social rented sector that is the anomaly.

Returning to the co-lessee scenario, suppose Y and Z, a shifty pair,have done a moonlight and gone to ground. Six months later X, who has remained in occupation and made up the rent via the Bank of Mum and Dad (other family configurations are available), having now suffered English Property Law under Dr Douglas Bain, has decided to chuck in the law completely and now wishes to end the tenancy. This is a problem. X is inhibited in so doing by the fact that Y and Z cannot be found (this being the consequence of s.44 of the Act, quoted above). 

But on the landlord side, things are different. U and V having reached a point where they can no longer stand each other, with U wishing to see the tenants (and their rental income stream) remain in place and V wishing to sell the property with vacant possession so as to liquidate her or his share of the asset, the 2016 Act now favours V, who may give notice and proceed to the First-tier Tribunal.

So, in short, in this one respect, the 2016 Act enhances the rights of the co-lessor while leaving the private residential co-lessee in a less privileged position than a co-lessee in the social rented sector but otherwise in the same position as under the common law, unhappily and precariously tied to a lease that they are in breach of through no fault of their own.  The lesson is that, when co-leasing in the residential private rented sector, one should be very, very careful of who you’re choosing to share with.

As a closing comment, it is important to remember that many issues in respect of the new private residential sector tenancy regime will be tried and tested in a new judicial forum; the Housing and Property Chamber First-tier Tribunal, as detailed in this earlier blog post.

Interesting times.

POSTSCRIPT

The 2016 Act s.62(2) provision whereby ay one of a plurality of co-lessors may issue a notice to leave and make subsequent application to the First-tier Tribunal is a statutory encroachment upon one of the core rules of co-ownership in Scotland, namely the rule of unanimity in Bell’s Principles of the Law of Scotland at 1071-1072; i.e. the rule of unanimity in use and management (‘…the consent of all being requisite in the management, alteration, or disposal of the subject’ which places the objector in the stronger position (‘in re communi melior est conditio prohibentis’)).  The peculiar situation where a tenant holds a single property of two or more separate landlords under a single tenancy is not unknown in Scotland.  This usually involves agricultural land and follows on from a sale and division.  A recent such instance was considered in Crewpace v French 2012 S.L.T. 126.  The matter is discussed in Rennie, Leases at p.589.

PPS

Lease law enthusiasts will be interested to hear that a fourth edition of Peter Robson’s classic Residential Tenancies is in the pipeline.  The new edition will include a contribution from our own Malcolm Combe.

Published by School of Law, University of Aberdeen

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