Surrender of Lease
The parties to a lease will enter into it at the outset
with the intention of complying with its terms throughout its duration.
Sometimes however, situations change and for one reason or another one of the
parties may wish to bring the lease to an early end. One way to do this is by
negotiating an agreement to end the lease - this is called a surrender and is
usually documented by way of a formal deed recording the fact that it has been
brought to an end and that the parties have no further liabilities to each
other.
Some different possible scenarios are
- Landlord wishes to regain possession of the premises
perhaps because he wants to redevelop or sell with vacant possession. In
this case the tenant will be looking to the landlord to make a payment to
him as compensation for bringing the lease to an early end . The tenant will
have to relocate which will necessarily incur expense. The tenant will also
take account, in agreeing a figure, how important it is to the landlord
- Tenant wishes to leave before the lease ends, perhaps
because he is finding it difficult to keep up with the rental payments and
has not been able to find someone to buy it from him. In this case the
landlord will look to the tenant for a payment - this is generally referred
to as a reverse premium. The landlord will need to
consider how much difficulty he will have in reletting the property
- Both Landlord and tenant mutually agree that they
wish to bring the lease to an end. In this case probably neither party will
make any payment to or claim against the other
To cover these situations we have three different
versions of a surrender as set out below. Each document provides that upon
completion of the surrender both landlord and tenant will each be released
from any existing liabilities that might have arisen under the lease
|
Payment from Landlord to Tenant |
£20 |
 |
|
Payment from Tenant to Landlord |
£20 |
|
|
Mutual agreement - no payment |
£20 |
|
A few related points to consider if you are dealing with
a surrender
- You need to consider whether or not any Stamp Duty
Land Tax is payable - even if not you may need to complete SDLT1 - follow
this
link for more information
- If you want to enter into an agreement to surrender a
lease at a future date then, if the lease carries security of tenure, you
need to ensure that the relevant procedures are followed - similar to
granting a lease which excludes security of tenure. Remember it is the
agreement to surrender at a future date that requires the procedures to be
followed - not the surrender itself. We do not presently have a template
agreement to surrender but if this would be useful please let us know and we
will consider providing one.
- If the lease is registered at HM Land Registry or it
is noted in any way against the landlords title then the Land Registry will
need to alter their records. You may need to make an application to the Land
Registry to deal with this.
The
documents downloaded from this web site will be in the form of a Zip file. Once downloaded it will unzip to a Word
document. You will need a zip utility to unzip the document - Windows XP
contains a built in utility. Alternatively shareware versions suitable for
unzipping a file can be obtained from the Internet - for example, click the Winzip
button at the side of this page.
The
documents available on this site have been prepared for use in England &
Wales. They may not be valid if used in other areas.
