Frequently land being acquired for development will be subject to agricultural tenancies as the seller will have sought, and will continue to seek, value from the land as it is marketed and negotiations progress.
Such tenancies are typically seen as being unproblematic, often readily terminable, either prior to completion or afterwards if the buyer is in less of a rush or because the tenancy won’t immediately allow.
However, notwithstanding any written tenancy agreement preventing subletting, it is not uncommon for an agricultural tenant to diversify and to allow third parties to use or occupy parts of the land it is not using. This can create real difficulties in obtaining vacant possession where the use is not an agricultural use. In such instance that additional third party may have acquired rights under the Landlord and Tenant Act 1954 which can make it much more difficult, and likely costly, for a Seller to recover possession for them irrespective of the ease of recovering possession from the primary tenant: it cannot be assumed that their status will be the same as the primary tenant occupier and terminable in the same way, or by the same notice.
Unfortunately, the information that a seller is able to provide is often quite limited as even if it is aware that the tenant has allowed others to occupy, it may not be able to provide sufficient detail to enable a purchaser to have certainty as to how and when it will be able to obtain possession.
Legal advice should always be sought when considering the ability and timings for obtaining possession against a third party occupier, but, we would recommend that due diligence is undertaken at the early stages of considering site viability. As a starting point:
If any occupiers are identified that are not subject to written tenancies consider taking legal advice at an early stage, before heads of terms are negotiated and agreed. The issue is typically not if you can recover possession, but the timings and costs may impact upon viability and, therefore, could be relevant to the eventual terms that are agreed.
This article is for general information only and does not, and is not intended to, amount to legal advice and should not be relied upon as such. If you have any questions relating to your particular circumstances, you should seek independent legal advice.