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Are your partnership properties being managed properly?

News / / Bristol, Cardiff, London

In a recent High Court case, Procter v Procter and others [2022] EWHC 1202, the dispute related to a periodic tenancy a landlord had with three sibling tenants. The tenants acted on trust for a partnership. This partnership was reduced from three individuals to two when one sibling, Suzie, retired from the partnership.

Suzie, as one of the tenants under the lease, served a notice to quit the tenancy. However, by doing so she was in breach of duty as a trustee of the tenancy. This is because the notice was served against the wishes of the remaining two siblings in the partnership who did not want to bring the tenancy to an end. The question was whether the notice to quit was valid.

HH Judge Davis-White QC held that without the terms or wording of the tenancy stating otherwise, one legal joint-tenant could serve a valid notice to quit a tenancy without the other two tenants being involved in the process. This was in clear contrast with what is required when the tenancy is brought to an end in another way. The joint-tenants must act unanimously when a lease’s break clause is exercised, a lease is surrendered, an option to renew the lease is exercised or when an application for relief from forfeiture is made.

The Judge decided that a validly served notice to quit could not be withdrawn. However, the High Court did order a rescission of the notice to quit, (returning the parties to the position they would have been in if the notice had not been served), so the periodic tenancy would continue. Although rescission normally applies to contracts, the Court saw no reason why rescission could not be applied to a notice to quit where the case was appropriate. It is also worth noting that the landlord was aware that the notice was served in breach of duty.

You can read the full judgment here.

What can partnerships do to protect themselves?

  • Ensure that the partnership leases and properties are transferred out of the old partners’ names into those of the new partners at the earliest opportunity
  • Ensure that the partnership deed containing the duties and roles of the partners is kept up to date
  • Review the partnership property portfolio regularly to ensure that no changes need to be made, that all the interests in property are put in writing and that the key dates such as end of lease term dates and break dates are diarised and monitored.

Please get in touch if you need any advice regarding partnership leases and partnership property portfolios. 

Janine Harris

Janine Harris Partner

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