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New Provisions

Section 47 of the Civil Law (Miscellaneous Provisions) Act 2008 which came into effect on the 20th July 2008 has significantly extended the situations in which tenants or prospective tenants can renounce their rights to a new tenancy in tenements within the meaning of the Landlord and Tenant Acts.

Section 4 of the Landlord and Tenant (Amendment) Act 1994 (as amended by Section 191 of the Residential Tenancies Act 2004) permitted this right to be renounced, but only where the renunciation was completed before the commencement of the tenancy. Section 47 now permits renunciations to be entered into both before and during the course of a tenancy, regardless of whether the lease was created prior to the date on which Section 47 came into force.

Advice to Clients

Solicitors acting for, or advising tenants contemplating executing renunciations should advise such tenants that as a consequence of executing such renunciation they will automatically be waiving any rights which they might have had to compensation under Section 16 of the Landlord and Tenant (Amendment) Act 1980 on quitting the tenement, because such compensation is a consequence of an application for a new tenancy being defeated by a landlord establishing one of the grounds listed in Section 17 (2) of the 1980 Act.

It would appear that a tenant’s right to compensation for improvements under Section 46 of the 1980 Act would not be affected by a renunciation as it does not arise from a refusal under Section 16. Accordingly, solicitors acting for both landlords and tenants should draw the attention of their clients to the survival of the right to compensation for improvements.

Temporary Convenience

On the face of it there would not appear to be any point in effecting a renunciation in respect of a tenancy or lease which e.g. contains a temporary convenience provision or is granted in respect of an office or employment, since the effect of such provisions is to take the property concerned outside the definition of “tenement”. However, a renunciation would pre-empt the possibility of such provisions being subsequently held to be ineffective in a particular case.

Independent Legal Advice

As the tenant must obtain independent legal advice before executing a renunciation, it is clearly desirable that the solicitor giving such independent advice should witness the signature of the tenant on the renunciation.

In the event of the tenant’s signature not being witnessed by the independent solicitor, the landlord’s solicitor should consider whether, in the particular circumstances, it is desirable to obtain confirmation from the independent solicitor named in the renunciation that he did, in fact, advise the tenant in relation to the renunciation.

Putting Assignee on Notice

The Conveyancing Committee is of the view that if the tenant assigns his interest under the lease the assignee will be bound by the renunciation even if he is not on notice of it, but that clearly it is desirable that the renunciation should be incorporated in the lease so that it cannot be overlooked by a proposed assignee. This can be done by reciting in the lease that - "The tenant has renounced his rights as set out in the deed of renunciation annexed hereto".

If the renunciation is signed after the execution of the lease, it should be physically annexed to the original lease and a copy annexed to the counterpart.

Renunciation Prior to Execution of Lease

A draft form of renunciation is set out here with options A and B. Option A should be used where a renunciation is signed before the execution of the lease and option B crossed out or deleted.

Renunciation Subsequent to Lease

Where a renunciation is signed subsequent to the execution of the lease, option B of the draft renunciation should be used and option A crossed out or deleted.

Recital of Consideration when Renunciation is Subsequent to Lease

A renunciation following the execution of the lease will invariably be granted only as a result of a financial or other consideration offered by the landlord and this should be recited, as it cannot be taken that it is given as a term of the original lease.

While this may not be relevant to the renunciation of the tenant's rights (as Section 47 specifies that no consideration is necessary) it may be relevant to other aspects of the renunciation as drafted - the agreement to notify any proposed assignee or sub-tenant of the existence of the renunciation and to consent to the registration of an inhibition by the lessor on any leasehold folio opened in respect of the tenancy.

Sub-Tenancy

In the case of a tenant sub-letting an interest in his tenancy, the proposed sub-tenant should (a) be informed of the renunciation and (b) be obliged as a term of the sub-tenancy to enter into a renunciation on similar terms to that signed by the tenant.

Such renunciation by a sub-tenant should be incorporated in his deed or physically attached to it.

If the sub-tenant gives a renunciation subsequent to the granting of the sub-tenancy, again option B of the precedent should be used.

Purchase of Leasehold Interest

A purchaser of a leasehold interest should (1) carry out a search in the Registry of Deeds to establish if a renunciation has been registered and (2) by way of requisition on title ask - “Has the vendor or any superior tenant executed a renunciation of his rights under the Landlord and Tenant Acts.”