Unwritten terms need a looking at
in the Register of Community Interests in Land. When registered, if the landowner proposes to sell the farm or part of it they must give the tenant the first chance to buy.
The Agricultural Holdings (Scotland) Act 2003 contains a valuation formula. If the tenant chooses not to buy, the landowner is able to sell the farm albeit with the sitting tenant in place.
These rights don’t apply to limited duration tenants and short limited duration tenants under the 2003 act.
If the landlord sells farmland against which a tenant has registered a pre-emptive right to buy but doesn’t give the tenant first option, then the tenant has an absolute right to buy from the purchaser regardless. One of the things one does when buying farmland is to check the Register of Community Interests in Land to see if a secure agricultural tenant has registered their pre-emptive right.
However, the Land Reform (Scotland) Act 2016 is abolishing the need for a secure agricultural tenant to register their pre-emptive right to buy. It will arise automatically if the landlord decides to sell. When the need to register is abolished, which is likely later this year, there will be no register which a prospective purchaser can check.
It is likely that a purchaser will want to obtain some strict warranties from a seller that in fact there isn’t a tenant who might come out of the woodwork at a later date.
Likewise, landowners who are contemplating selling land where there might be an informal occupation arrangement will want to be sure what the nature of that occupation is and whether it can be brought to an end. Otherwise they risk falling foul of a claim by a purchaser who finds themselves being forced to sell by someone who was a secure tenant and who wasn’t given the right to buy.
The abolition of the need to register a preemptive right to buy may mean that many unwritten arrangements will have to be looked at to establish what the rights and obligations of the landowner and the occupier are.