Scotland’s tenant farming commissioner, Bob McIntosh, writes about his work to improve relations with tenants and landlords
Succession planning is important in any business and no less so for farming businesses, especially where a tenant wishes to pass on the tenancy to another person, normally someone in their extended family.
Careful thought needs to be given to when and how to make the transfer.
And tenants must follow the correct procedures as failure to do so may, in some cases, lead to the tenancy being terminated.
I have published a guide that outlines the ways in which an agricultural tenancy can be passed on to another person.
It includes information on whether and how a tenancy might be assigned during a tenant’s lifetime; bequeathing a tenancy, and transfer of a tenancy when someone fails to leave a will.
The guide summarises some of the legal basics, but I strongly recommend that you always obtain independent legal advice that’s relevant to your particular circumstances and seek it in good time, as some parts of the process are time-sensitive.
Here are some of the basic rules for assignation and succession.
A tenant can only transfer a tenancy to another individual. Tenancies cannot be transferred to a company, firm or club, or to two or more people, unless the landlord agrees.
You can’t normally pass the tenancy to just anybody, unless the landlord agrees. Preferential consideration is usually given to “near relatives” (a full list of these potential transferees is in the Guide’s appendix).
There are three main ways to pass on a tenancy: as a lifetime assignation; as a testate transfer through a will, when someone dies; and an intestate transfer (where someone dies without making a will) where the tenant’s executors may still be able to transfer the tenancy to another person.
In each of these situations the landlord has certain rights to object; these are described briefly in our new Guide.
Which route is chosen will depend on individual circumstances but, generally speaking, making an assignation to a “near relative” during the tenant’s lifetime is likely to be the most straightforward.
It’s important for tenants to have a plan in place for assignation or succession to ensure that, at the appropriate time, tenants can make way for the next generation.
A Guide to the Transfer of Tenancies by Assignation and Succession is available here.