How do I Surrender a Lease?

Articles > Commercial Property

How do I Surrender a Lease?

February 4, 2022         Ava Akbarian

A Deed of Surrender of Lease is an official document used to formally terminate a lease before the expiry date. The purpose of the Deed of Surrender is to document agreed arrangements between a landlord and tenant, and outline each party’s rights and obligations. 

When do we use a Deed of Surrender of Lease?

A Deed of Surrender establishes the date a tenant is required to vacate the property and the stipulated conditions of the premises. It becomes in force when both parties agree upon the conditions. 

A Deed of Surrender can be used where a landlord and tenant mutually agree to end a commercial, retail or residential lease. 

Standard Key Clauses to Negotiate

Make Good Requirements

A ‘make good’ clause outlines the specific conditions the tenant is required to leave the premises upon premature termination. Make good clauses are commonly disputed by parties.

Issues may arise for landlords and tenants if make good requirements are too broad, ambiguous or not applicable to the premises. 

Make good clauses provide parties with the opportunity to clarify any obligations the tenant is required to fulfil upon early termination of the lease.

Mutual Release Provisions

An indemnity and release clause should be included to discharge the landlord and tenant from any further legal claims or obligations in the lease, following the date of surrender.

Payment of Legal Fees

The landlord and tenant must agree on what legal costs must be paid, and which party will bear these costs. 

This may include any legal costs for drafting the deed of surrender or any stamp duty fees.

The clause may outline that a specific party is responsible for paying such costs, or alternatively that each party is to bear their own legal costs.

Payment of Rent and Outgoings

The tenant is generally required to pay rent up to the date of surrender, however parties may have agreed to classify any outstanding outgoings as ‘non-payable’.

Security Deposits and Bank Guarantees

From the date of surrender the landlord must return any security deposits such as a bank guarantee provided by the tenant for the existing lease.

Key Takeaways

As a tenant or landlord, circumstances may arise where you are required to surrender the lease prior to the agreed expiry date.

It is important to factor in the negotiation of key clauses to ensure you are not in a disadvantageous position when releasing yourself from the obligations of an existing lease.

The OpenLegal Team are always open to assist with drafting a Deed of Surrender of Lease to facilitate a smooth process when terminating a lease before the expiry date.

Please, fill in the form on this page or call OpenLegal on 1300 337 997. 

About Ava Akbarian

Ava works in the legal content team at OpenLegal while studying in her fourth year of Bachelor of Laws and Communications (Journalism) at the University of Technology Sydney. Her interests are legal reporting, court reporting and medical law.