Surrendering a Lease
There are two ways to end a tenancy; either a landlord or leaseholder serves a notice to terminate the tenancy agreement or agrees to end the tenancy by mutual consent. In the first situation, both parties are required to follow the rules laid out in the contract. In the second situation, both parties can proceed to end the tenancy with new, agreed terms, also known as a surrender of the tenancy.
Surrendering a Lease
A lease surrender is a voluntary, mutual agreement between the tenant and landlord that terminates the tenancy. The lease is surrendered when the tenant’s interests are transferred back to the landlord by mutual consent.
The surrender of the lease can be either express or implied.
Express Surrender
An express surrender is usually achieved formally, by deed, however, it is not always necessary. The deed is signed by the landlord and tenant in the presence of a witness. The written agreement outlines that the tenancy will come to an end with immediate effect.
Implied Surrender
Implied surrender, otherwise known as a surrender by operation of law, occurs when the tenant abandons the property and stops paying rent. For Implied Surrender to take effect, there has to be some unequivocal act or series of acts that show that the tenant and landlord have accepted that the lease is ended or about to end.
At its simplest, both parties will agree that the tenancy has ended, and the property is handed back to the landlord.
Surrendering a Lease by Mutual Agreement
A mutual surrender can happen due to any of the following reasons
- The tenant has a change of circumstances or is in financial difficulty and now wishes to end the tenancy agreement prematurely.
- The tenant needs the property for occupation, redevelopment, or to lease it to a new tenant before the end of the fixed term.
- Both parties do not wish to end the property on the final day of the rental period.
Tenant Moves Out Without Notice
Surrender does not occur automatically if the tenant simply moves out and returns the keys. If the tenant is absent for a significant time and owns a substantial amount of money, the landlord can make an application to the court under trespasser proceedings to end the tenancy as surrendered by operation of law.
Abandonment
If the tenant moves out of the property without giving the notice or formally terminating the agreement, some landlords may affix an abandonment notice on the door. It will state that the property will be repossessed if the leaseholder does not return within the specified period. However, this notice is not legally binding.
Accepting the Surrender of Lease
If the lease is surrendered, the tenant is no longer required to pay rent or comply with the lease terms. However, the tenant will be held liable for any rent due to existing breaches. If the tenant has been absent for a long time, the landlord may pursue the tenant’s guarantor for unpaid rent and other breaches. The landlord should seek legal assistance before accepting surrender to avoid unexpected liabilities.
