How to surrender a commercial lease

A lease is surrendered when the tenant's interest is transferred back to the landlord and the parties accept that the lease has ended. There are formal and informal procedures to allow a lease to be surrendered, but this can be a very contentious area of law and it is generally not the case that both sides are happy for the lease to be brought to an end.

Our expert Commercial lawyers will support you if you are unhappy with your commercial lease or feel that it is time to move on. We will ensure that we find you the best option available to you. We understand that the surrender of a lease can be a potentially stressful time and we will work with you to ensure the best outcome. We also advise and represent landlords who need advice when their tenant wishes to surrender their lease. Call us now on 020 3753 4667 and speak to a solicitor to make an immediate free consultation or email us via our online contact form.

How can a commercial lease be surrendered?

Where a tenant wishes to vacate premises before the end of its fixed term, they can surrender the lease. In some cases, a landlord can also offer to accept a surrender of a lease. A lease can be surrendered in the following ways:

Using the formal method of expressly surrendering the lease by deed.
Using the operation of law to surrender the lease.

This is where the landlord and tenant agree that the lease will be surrendered and act in such a way that is inconsistent with the lease continuing. This method is generally cheaper and quicker than surrendering by deed, however, it can be less certain. The actions of the landlord have to be clear to show that they have accepted the tenant has surrendered the lease. Simply handing the keys back to the landlord is not enough to surrender the lease. Where a tenant does this, then the landlord should immediately seek legal advice since this does not automatically end the lease. Both the landlord and the tenant have to perform an action that is inconsistent with the lease continuing.

For a lease to be surrendered under the operation of law requires an unequivocal act showing that the parties consider the lease to be ended. Examples of this include:

The tenant vacating the property and the landlord taking over occupation.
A new lease being granted by the landlord to a third party at the original tenant’s request.

A surrender of the lease under the operation of law can be done on purpose, but it can also be done accidentally, for example, where the parties agree to vary a lease. Even if there is no intention to surrender the lease, it will still be regarded as being surrendered under the operation of law.

Where the surrender is accepted, the tenant no longer is liable to pay rent or perform any lease covenants that arise in the future. However, any outstanding rent or existing breaches can be pursued by the landlord, though again this is a complicated area of law requiring specialist legal advice. Before accepting a surrender, a landlord should make the relevant due diligence checks, so there are no unexpected surprises, such as where an underlease is in existence.

Contact our Commercial Property Solicitors in London, Westminster, Southwark & Tower Hamlets

Created on 26 May 2019.