What Is a Surrender of Lease?

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What Is a Surrender of Lease?

January 28, 2022         Lauren Hanna

A surrender of lease is when the tenant and landlord agree to end the lease before the date the lease term expires. This agreement must be written in an official document called the deed of surrender of lease. 

Both the tenant and landlord have to consent to the surrender. The parties will have to negotiate and agree on the conditions and must include them in the deed of surrender of lease. 

What are the reasons for a surrender of lease?

There are many different reasons a landlord or tenant may want to surrender a lease. These may be because:

  • the landlord wants to sell or restructure the property;
  • the tenant is unable to afford the rent anymore or;
  • the tenant needs a larger property.

Negotiation 

As mentioned above, the tenant and landlord will have to negotiate the terms of the surrender. Landlords typically do not want to terminate the lease early making it hard to negotiate. Tenants may be able to get the landlord to agree by waiting until the landlord finds a replacement or even by aiding them in finding a new tenant. 

What are the considerations when negotiating a surrender of lease?

During these negotiations there are key issues that must be discussed and agreed upon:

  • The tenant and landlord will have to agree on the date the tenant will leave the premises. 
  • The landlord may have to return the security deposit to the tenant that was given at the beginning of the lease. 
  • The landlord may request a surrender fee which is a single payment of money. The parties will have to agree on the amount of the surrender fee. 
  • The lease may contain a ‘make good’ clause. This means before leaving the tenant will have to ensure the property is in the same condition it was originally. 
  • The tenant and landlord will have to agree on who will pay the costs such as the legal costs. 
  • The agreement should include a mutual release clause that releases both parties from any obligations or responsibilities they had under the lease. 

Contact our team of property lawyers if you need any assistance with a commercial lease.

About Lauren Hanna

Lauren is studying a Bachelor of Law and a Bachelor of Business at UTS. She is interested in commercial law, finance and banking law, and property law.