There is no legal requirement for written agreements in the agricultural world but it’s imperative to understand the impact of relying on verbal arrangements.
While there is no legal requirement for written agreements in the agricultural world it is imperative to understand the consequences of relying on verbal arrangements. Legislation tends to step in and imply unintended terms in such circumstances. Below are a few examples.
- You allow a farming tenant to occupy your land under a verbal tenancy arrangement. The tenant will (if the occupation began after 1 September 1995) benefit from the protection of the Agricultural Tenancies Act 1995. They will likely have the right to remain on the land until not less than twelve months’ written notice is served (to end on an anniversary date of the tenancy). In addition, the tenant may be seen as a business tenant and therefore have the protection of the Landlord & Tenant Act 1954. This means that in the event that you try to regain possession the tenant could have the right to remain in occupation of the land by applying to the court for the grant of a new lease. If a written agreement was in place the parties could specifically exclude the tenant’s protection under the 1954 Act and could agree to a shorter notice period for regaining possession.
- You allow a neighbour to graze horses on your land but that neighbour fences the land off and is grazing other people’s horses alongside their own. While the intention may have been for the neighbour to be a mere licensee it is probable that they are a tenant, and to make it worse, the neighbour could be seen as a business tenant and would therefore benefit from security of tenure under the Landlord & Tenant Act 1954 as mentioned above. If a written agreement was in place the landlord could stipulate covenants confirming that no business or trade should be carried out on the land to ensure the tenant does not benefit from the protection of the Landlord & Tenant Act 1954.
- You let your neighbour shoot over your land with no written agreement. If your neighbour runs his shoot as a business (i.e. runs let days) there is a chance that he may also benefit from protection under the Landlord & Tenant Act 1954. If a written agreement was in place the landlord could exclude the benefit of the 1954 Act.
- You allow a farm worker to move into a residential property on your farm on an oral agreement. This farm worker could be benefitting from agricultural occupancy rights as discussed by Ruth Lambillion in her article of this edition. If a written agreement was in place and a notice served upon the worker immediately prior to them taking occupation (confirming that the tenancy is an assured shorthold tenancy and not an assured agricultural occupancy) then they would not benefit from agricultural occupancy rights.
- Two family members or farmers ‘carrying on a business in common with a view of profit’ could have automatically created a farming partnership. In the absence of a written agreement it is assumed, under the Partnership Act 1890 that:
If a written partnership agreement was in place the partners would benefit from clarity and could stipulate provisions relating to introducing new partners, removing partners, sharing profits, drawings, management of the business and how assets would be distributed in the event of a dissolution of the partnership.
There are many other examples to show where a written agreement is essential to properly impose the intended covenants upon each party. Most importantly it is one of clarity which can avoid litigation and unnecessary legal costs in the event that a relationship goes sour.
The content of this article is for general information only. For further information regarding landlord duties, please contact Sophia Key or another member of Birketts’ Agriculture and Estates Team. Law covered as at May 2016.
This article is taken from our Agricultural Brief Summer 2016 publication. Similar articles can be found in the latest edition.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at May 2016.