Risk management

Renewing tacticsA firm acting for a tenant on a lease renewal under part II of the Landlord and Tenant Act 1954 must take account of the Civil Procedure Rules (CPR).A tenant serving a section 26 request for renewal under the 1954 Act sets out a date at which the new tenancy is to commence.But unless the tenant applies to the court for a new tenancy - within a period not less than two months and not more than four months after giving the section 26 request (or the landlord's section 25 notice) - the tenant loses his or her entitlement to renew under the 1954 Act.Once a valid application is made, termination of the tenancy is postponed generally until three months after final disposal of the application.If the landlord does not oppose the tenant's application in principle, the parties would then often agree to adjourn the proceedings.

The tenant's position having been protected by commencement of proceedings, the parties could then negotiate terms for a new tenancy rather than litigate in earnest.But now the rules have complicated matters.

Under the CPR, the County Court should fix a date for a case management conference.

But some County Courts are issuing standard directions of their own motion, ordering disclosure of evidence, experts' reports on rent and proposed lease terms.A tenant's solicitor may have issued protective proceedings, fully expecting to avoid getting dragged into time-consuming litigation.

He or she may not have prepared any evidence.

Nevertheless, court orders must be complied with.

The only alternative is to mount successive applications to the court to stay proceedings while negotiations between the parties continue.

Some tenants may conclude that issuing proceedings for a new tenancy is now more trouble than it is worth.

But solicitors should advise their clients how risky this can be.If the date four months after the giving of the section 26 request or the section 25 notice is overlooked and passes before a new tenancy has been agreed formally or proceedings issued, the landlord will be in a very strong negotiating situation and can effectively demand a ransom rent, subject to market conditions.

And a tenant whose position has been prejudiced in this way may well seek recompense from his solicitor.X For information on claims prevention, contact your claims handler at the Solicitors Indemnity Fund or the Risk Improvement Unit; tel: 020 7566 6000.