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Commercial leases and the L&T Act 1954 — SQE1 Property question

A worked single-best-answer question on commercial leases and the l&t act 1954, with why each wrong option is wrong — the way SQE1 traps candidates.

Commercial leases and the L&T Act 1954

Galt Properties Ltd is granting a five-year lease of a shop to Hollis Retail Ltd, and both parties want the lease contracted out of the security of tenure provisions of the Landlord and Tenant Act 1954. Galt served the statutory warning notice on Hollis on 1 March. The lease is to be completed, and Hollis will become bound, on 8 March.

What must Hollis do to make the contracting out valid?

  1. ASign a simple declaration in the prescribed form, because the warning notice was served before the lease was completed.
  2. BObtain a court order approving the agreement to exclude security of tenure.
  3. CMake a statutory declaration in the prescribed form before an independent solicitor or other person authorised to administer oaths, because the notice was served less than 14 days before the tenancy is entered into.
  4. DNothing further, because security of tenure cannot apply to a lease of five years or less.
  5. EServe a counter-notice on Galt within two months accepting the exclusion.
Show answer and reasoning
C is the best answer. Under the Landlord and Tenant Act 1954, s 38A, and the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003, the landlord must serve a warning notice on the tenant. If it is served at least 14 days before the tenant enters into the tenancy or becomes contractually bound, a simple declaration suffices; otherwise the tenant must make a statutory declaration before an independent solicitor or other authorised person. A reference to the notice and declaration must be contained in or endorsed on the lease.

Rule: To contract out of the 1954 Act, the tenant makes a simple declaration if the warning notice was served at least 14 days before it is bound, and otherwise a statutory declaration.

  • A A simple declaration is sufficient only where the notice is served at least 14 days before the tenant becomes contractually bound. (right rule, wrong facts)
  • B Court approval was abolished in 2004 and replaced by the notice and declaration procedure. (wrong rule)
  • D Leases of five years are within the 1954 Act; only tenancies not exceeding six months are generally excluded. (wrong rule)
  • E The counter-notice procedure relates to renewal under the Act, not to contracting out. (answers a different question)

Source: Landlord and Tenant Act 1954, s 38A; Regulatory Reform (Business Tenancies) (England and Wales) Order 2003, Sch 1 and Sch 2

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