Since 1970 the Lands Tribunal for Scotland has been able to discharge or vary “land obligations”. These are usually thought of as title conditions. However certain terms of a lease may also be varied.
This was discussed in a very recently reported case involving a dispute between the landlord of the Paisley Centre in Paisley and the Co-operative Wholesale Society, the tenant of a department store. The tenant wanted to vary or remove the keep open obligation. The Lands Tribunal could vary the recorded lease only if the condition related to the land. Unfortunately it is not clear from the judgement whether the keep open clause is one “which relates to the land”. The Court of Session held that it was a matter for proof whether the keep open clause was a title condition which could be varied by the Lands Tribunal, and sent the case back to the Lands Tribunal for a decision.
The only other relevant case was from 1985 where the court, again on appeal, was very clear that the alienation clause could not be varied by the Lands Tribunal as it simply dealt with who the tenant was and did not relate to the land.
My view is that repair and alterations provisions would relate to land, as they have an effect on what is handed back at the end of the lease, but the argument on use is less strong. The aim of a restriction on use is often commercial, to benefit the landlord during the lease, rather than relating to land.
Just because the Lands Tribunal can vary a lease does not mean it will. It will vary the provision if it is reasonable to grant the application, and considers a number of specified factors. Those factors mean the Lands Tribunal has a wide discretion. It is possible that the discretion will be exercised differently in title and lease conditions, but we do not know yet.
What can a landlord do to protect the investment value? The options are limited for existing leases. For new leases, or when considering applications for consent to assignation or sub-letting, there are strategies that can be considered which might protect the existing contractual terms?