Surrendering a Lease: Actions Don’t Always Speak Louder Than Words

A lease is “surrendered” when both the landlord and tenant agree to bring it to an end before the end of the contractual term, with the tenant’s interest in the property in effect returning to the landlord.  However, it is important to be aware that for a lease to be surrendered in law it is not necessarily a case of the tenant simply notifying the landlord and handing back the keys.

A lease may be surrendered by way of a written agreement by the parties, in the form of a deed, or by “operation of law” where a written agreement has not been entered into for whatever reason.  It is this latter route which can be a minefield as the action taken must be both consensual and unequivocal if the lease is to be surrendered.

Unsurprisingly, there have been many cases which have tested this issue and the courts have held, for example, that a lease is not surrendered where the tenant leaves a third party occupier in the property while the occupier negotiates a new lease with the landlord (QFS Scaffolding Ltd v Sable (2010)).  Nor was the lease surrendered where the landlord knew the property was empty and did not demand any rent from the tenant (Belcourt Estates Ltd v Adesina (2005)).

The case of Padwick Properties Ltd v Punj Lloyd Ltd from earlier in 2016 highlights the high threshold that must be met for surrenders of this kind.  It was held by the court that even where a landlord had changed the locks to the property after it was vacated by the tenant, accepted the keys, and even marketed the property for sale with vacant possession, these actions still did not amount to a surrender of the lease in the circumstances.

The lesson here: the safest option when surrendering a lease is to arrange for the surrender to be documented in a formal, written agreement to avoid any ambiguity.  If this is not possible, make sure that all action taken to bring the lease to an end is clear, documented and with the consent of both landlord and tenant.

At Forbes our Commercial Property solicitors can advise on all aspects of a lease, including the most appropriate course of action to take in order to surrender the lease. For further information contact our Commercial Property solicitors on 0800 689 0831 or make an enquiry here.  You can also contact solicitor Mohassan Mehmood on 0333 207 1161 or via email on Mohassan.Mehmood@forbessolicitors.co.uk.

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