A can grant B a loan for use (commodatum). The commodatum is a gratuitous contract by which one party lends property to another, subject to the obligation to return the property after use (Civil Code, arts. 1129–41). Writing is not required, but handing over the property is essential for the completion of the contract of commodatum (real quod constitutionem).

A loan for use may be concluded for a fixed term or for a certain purpose. In the case of non-completion, the property may be reclaimed only on the basis of an objective and just ground such as an urgent and unforeseen need for the property. However, where the property is lent for an indefinite term, the contract is terminable at the will of the lender (Civil Code, art. 1137 no. 2). Portuguese law does not draw a distinction between a precarist whose holding of the property is revocable at the will of the lender and an ordinary borrower for use. Both contracts are governed by the same provisions.

Loans of urban premises or rural land are, except among relatives, not common in Portugal.

Scotland

There are three ways in which this can be achieved. The first is where A grants B a lease of the property. The second is for A and B to enter into some contract which confers a less complete right upon B than a lease does. Typically this is known as a ‘licence’. The third possibility is for A to grant B a liferent of the property.

A lease is a contract by which one person (the landlord) grants and another (the tenant) accepts the possession of property for a period of time in return for payment of a periodical payment (rent).122 There is a general law of leases (mostly, but not exclusively, common law) which applies to all leases. This is supplemented by various statutory ‘special regimes’, which apply to leases of certain types of property and give effect to policy considerations particular to that type of property. Both residential and agricultural property is subject to such special regimes and they will thus be considered in this report.

There are four ‘cardinal’ elements to a contract of lease: the parties, heritable (immovable) property, rent, and duration (or ‘term’).123 The

122For various modern attempts at a definition, see Rankine, Leases, p. 1; Paton and Cameron, Landlord and Tenant, p. 5; McAllister, Leases, p. 1.

123Paton and Cameron, Landlord and Tenant, p. 5; Gray v. Edinburgh University 1962 SC 157 (IH) 162.

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rent need not be monetary and can be nominal (a ‘peppercorn rent’) but there must be a periodical payment and not only a one-off payment at the beginning of the contract (a ‘grassum’).124 There can be both a rent and a grassum. The term of a lease need not be definite: it can be granted for an indefinite period or until the occurrence of an event.125 A lease executed on or after 9 June 2000 has a maximum duration of 175 years.126 Although the point is not entirely free from doubt, the right must most likely be to the exclusive possession of the land in order to amount to a lease. A contract which confers only certain uses of the land will not qualify.127

The exact content of the right differs depending upon which type of property is leased. In general, the landlord must place the tenant in possession of the property128 and maintain him/her in possession, do nothing and, in so far as he/she is concerned, allow nothing to be done to oust the tenant from possession.129 In return, the tenant is bound to enter into possession of the property on the date of entry and remain in

possession during the lease.130 The tenant is bound to take reasonable care of the property131 and to pay the rent.132

In order to terminate the lease, even on its contractual termination date (the ‘ish’), either the landlord or the tenant must serve a notice to quit, indicating that he/she wishes the lease to end on the termination date. Otherwise it is automatically extended by tacit relocation on the same terms and conditions as before, except to the extent that these terms and conditions are inconsistent with a lease for year to year.133 If the original lease duration was for less than one year, the extension will

124Rankine, Leases, p. 114; Mann v. Houston 1957 SLT 89 (IH) 92.

125Rankine, Leases, p. 115; Paton and Cameron, Landlord and Tenant, p. 7.

126Abolition of Feudal Tenure (Scotland) Act 2000, s. 67.

127Paton and Cameron, Landlord and Tenant, p. 14. Rankine’s definition was broader (Leases, p. 1), but various cases in the 1930s adopted the narrower approach that a tenant must have an exclusive right to the land: see John Menzies and Co. v. Glasgow Assessor 1937 SC 288 (IH) 295 297 and Austin Reed Ltd. v. Glasgow Assessor 1937 SC 317 (IH) 323–4. The original broader approach enjoyed an apparent revival, in Brador Properties Ltd. v. British Telecommunications plc 1992 SC 12 (IH) 19 but that has not resulted in a change in approach in subsequent texts: see McAllister, Leases, para. 2.40; Coulsfield and MacQueen Gloag and Henderson, para. 36.01 and Gordon and Wortley, Land Law, para. 18–06.

128Rankine, Leases, p. 200; Paton and Cameron, Landlord and Tenant, p. 127.

129Rankine, Leases, p. 213; Paton and Cameron, Landlord and Tenant, p. 128.

130Rankine, Leases, p. 233; Paton and Cameron, Landlord and Tenant, pp. 135–6.

131Paton and Cameron, Landlord and Tenant, pp. 138–9. 132 Ibid. 139–41.

133Neilson v. Mossend Iron Co. (1886) 13 R (HL) 50 54; Commercial Union Assurance Co. v. Watt and Cumine 1964 SC 84 (IH) 88.

be for the same period; if originally for one year or more, the lease will automatically be extended for one year.134 Common law and statute law combine to provide a complex amalgam of periods for serving notice to quit.135 A lease may also be prematurely brought to an end in certain circumstances: the parties may have agreed that one or both may terminate the lease (a ‘break clause’) or the landlord may ‘irritate’ the lease in response to breach by the tenant.

Leases of both residential and agricultural property are subject to special statutory regimes, the most important feature of which is the impact on the landlord’s ability to remove the tenant at the expiry of the lease. A lease of a private dwellinghouse must not exceed twenty years.136 The Housing (Scotland) Act 1988 created the ‘assured tenancy’ and ‘short assured tenancy’. Wherever a house is let as a separate dwelling to one or more individuals, one or all of whom will occupy the house as their only or principal home, it is an assured tenancy unless it falls into the list of excluded types of let, which includes, for example, holiday lets and lettings by certain educational bodies to students.137 The tenant has security of tenure, allowing him/her to remain on the property after the period of the contract of lease has come to an end.138 The ‘contractual tenancy’ is followed by a ‘statutory tenancy’. An assured tenant can only be removed from the premises by court order, which will only be granted if one of various statutory grounds is made out.139 Obviously, landlords are keen to avoid granting security of tenure. This can be done by creating a ‘short assured tenancy’. Prior to the tenancy commencing, the landlord must serve on the tenant a notice, in the specified form, stating that the tenancy is to be a short assured tenancy.140 (Such tenancy must be for six months or longer.) The landlord then has an absolute right to regain possession of the subjects at the end of the contractual term, provided that tacit relocation is not operating.141 The landlord is to draw up a

formal document detailing the terms of any assured tenancy and provide a copy to the tenant.142 Should he/she fail to do so, the court may draw up

such a document. Short assured tenancies are by far the most common form of private residential let. A separate regime covers social housing and is not considered here.

134Paton and Cameron, Landlord and Tenant, p. 221. See generally Halliday, ‘Tacit Relocation’, p. 201.

135Detailed at McAllister, Leases, paras. 9.22–9.29.

136Land Tenure Reform (Scotland) Act 1974 ss. 8 and 9 (henceforth LTR(S)A 74).

137 Housing (Scotland) Act 1988, s. 12 and Schedule 4 (henceforth H(S)A 88). 138 s. 16. 139 s. 16(2), s. 18 and Schedule 5. 140 s. 32. 141 s. 33. 142 s. 30.

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Leases of agricultural property are also subject to a statutory regime, the mainstay of which is the legislation relating to agricultural holdings. Again the tenant, in certain circumstances, has security of tenure beyond the agreed contractual term. Four other key aspects are that:

(a)the tenant is, on removal from the property, entitled to be

compensated for improvements which he/she carried out to the property;143

(b)disputes are to be resolved by means of a special court (the Scottish Land Court);144

(c)in some circumstances, the tenant has a pre-emptive right to buy the agricultural holding in the event that the landlord puts it up for sale;145 and

(d)there are particular rules about succession to tenancies.146

An agricultural holding is a lease of agricultural land, defined as ‘land used for agriculture for the purposes of a trade or business’.147 Agriculture itself is expansively defined.148 Following recent reforms, there are now various types of agricultural holdings. One is a ‘grazing let’, where agricultural land is let for the purpose of it being used only for grazing or mowing during some specified period of the year.149 A ‘short limited duration tenancy’ (SLDT) is a lease of agricultural land for not more than five years which may be terminated by agreement.150 A limited duration tenancy (LDT) is a lease of agricultural land for not less than fifteen years.151 (A lease for any period between five and fifteen years takes effect as a lease for fifteen years.) A tenant of a LDT does not have security of tenure (in the sense that there is no rule that he/she cannot be removed unless the landlord establishes one of various specified grounds), but the normal rules of tacit relocation are modified: if certain prescribed steps are not taken to bring the tenancy to an end at its termination date, it will continue on a ‘cycle of continuations’ until these steps are taken. Initially, there are two ‘short continuations’ of three years, followed by a fifteen-year continuation, which cycle will be repeated indefinitely until the lease is terminated.152

143Agricultural Holdings (Scotland) Act 1991 Pt. IV (henceforth AH(S)A 91); Agricultural Holdings (Scotland) Act 2003 Pt. 4 ch. 1 (henceforth AH(S)A 03).

144AH(S)A 91 Pt. VII; AH(S)A 03 Pt. 7. 145 AH(S)A 03 Pt. 2.

146 AH(S)A 91, s. 11; AH(S)A 03 ss. 20 and 21. 147 AH(S)A 03, s. 93; AH(S)A 91, s. 1(2).

148AH(S)A 91, s. 85(1).

149AH(S)A 03, s. 3. Such a lease may not be for more than 364 days.

150AH(S)A 03, s. 6(2). 151 AH(S)A 03, s. 5. 152 AH(S)A 03, s. 8.

Then there is the possibility of a ‘1991 Act Tenancy’.153 A lease of an agricultural holding will only be a 1991 Act Tenancy if the lease is in writing and expressly states that the 1991 Act is to apply to it.154 Such a tenant enjoys full security of tenure. After the contractual period of the lease has come to an end, the lease will continue from year to year by tacit relocation until a notice to quit is served by the landlord. In most cases, the tenant may respond with a ‘counter-notice’ and the notice to quit will have no effect unless the Land Court consents to its operation. It may only do so on certain limited grounds, such as that the carrying out of the purpose for which the landlord proposes to terminate the tenancy is desirable in the interest of good management of the estate or that greater hardship would be caused by withholding consent to the notice than by granting it.155 In respect of each type of agricultural holding, there should be a written lease detailing specified matters.156 If there is no such written document, the terms can ultimately be determined by the Land Court.

There are also more specialised statutory regimes which apply to agricultural leases of crofts and small landholdings,157 which provide security of tenure. Although these apply to a substantial proportion of agricultural land in Scotland, they are, however, not of general application and it is far more difficult for such a tenancy to be created anew. The origins of crofting tenure lie in the response to the Highland Clearances, when tenants in the Scottish Highlands were evicted from property during the eighteenth and nineteenth centuries in order to leave the land free for other, ‘more-profitable’, uses.158 Primarily, the crofting legislation applies to existing holdings. Since 2007, it has once again been possible to create new crofts.159 This requires the approval of the Crofters Commission and it can only be done in certain areas.160 This report will focus upon agricultural holdings legislation.

153So named because the rules for these types of tenancy are found in AH(S)A 91.

154AH(S)A 03, s. 1(2).

155AH(S)A 91 Pt. III, in particular, ss. 21–4. For an overview of the procedure, see Dervaird and Usher, ‘Agriculture’.

156AH(S)A 91, s. 4; AH(S)A 03, s. 13.

157Gloag and Henderson, Law of Scotland, paras. 36–49 to 36–53.

158Flyn and Graham, ‘Crofting’, para. 1.

159Crofters (Scotland) Act 1993, s. 3 A(1), inserted by Crofting Reform (Scotland) Act 2007, s. 16.

160Primarily in one of the seven crofting counties in the Highlands and Islands, but now also in other areas designated by the Scottish Ministers: Crofting (Designation of Areas) (Scotland) Order 2010/29. For details, see Flyn and Graham, ‘Crofting’.

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The law distinguishes between long and short leases, and urban and rural leases. The first is relevant to how the lease may be made to bind successors to the landlord and so is detailed in the response to Case 2. The urban/rural divide is of relevance to the repairing obligations and to how the tenant may deal with his/her right. It is outlined in the response to Case 5.

A contract between A and B to allow B to occupy A’s property which does not amount to a lease, amounts to a licence. Sometimes it is referred to as a ‘right of occupation’. This is an amorphous concept, probably developed under English influence. Parties will attempt to create a licence typically in order to avoid the application of one of the statutory regimes mentioned above or the tax consequences of the agreement being a lease, and because granting a lease is not permitted in the circumstances. The courts are astute to preventing licences from being used for this purpose.161 If what the parties have agreed to amounts to a lease, the fact that they have labelled it a ‘licence’, will not prevent the court from holding that it amounts to a lease. A contract may be held to be a licence because it does not grant a right to use the land itself, but only to use a particular part of it or to put a particular part of it to some use.162 It may lack one of the other cardinal requirements for a lease (for example, rent). Tacit relocation does not apply to a licence. What other legal systems might categorise as a loan of land (that is, an agreement that B may use A’s land for no consideration), will be treated as a licence.

A may also grant B a liferent which entitles B to enjoy the use and benefit of the land, without encroaching on its substance, either for B’s lifetime or for some other (shorter) period.163 B is the ‘liferenter’ and A the ‘fiar’. The law distinguishes between ‘proper’ and ‘improper’ liferents.164 Only in a proper liferent does B obtain a real right (on which, see Case 2). Initially, following Roman terminology, the proper liferent was viewed as a ‘personal servitude’, but that terminology is not common now.165 Scots law did not receive the other personal servitudes, usus and habitatio, recognised by Roman law.166 For some time it was said that the fiar and liferenter had two separate but co-existent estates, each burdening the other, but the

161Brador Properties Ltd. v. British Telecommunications plc 1992 SC 12 (IH) 20.

162Paton and Cameron, Landlord and Tenant, p. 12.

163Gordon and Wortley, Land Law, para. 17-01; Erskine, Institute, II. ix. 39.

164Gordon and Wortley, Land Law, para. 17-02; Styles, ‘Liferent’, paras. 1608–9.

165Stair, Institutions, II. vi. 1; Erskine, Institute, II. ix. 39.

166Erskine, Institute, II. ix. 39. A right of occupancy may of course be created by means of a trust: MilneÕs Tr. v. Milne 1920 SC 456 (IH) 460.