A Deed of Surrender allows the early termination of a lease upon the agreement of both parties. This legal document will list the obligations that need to be fulfilled by both parties, before the rights and interests under the lease can be extinguished. In reaching an agreement there is likely to be some negotiating between the parties.
What obligations the tenant must fulfil under the current lease
The lease would have stated the obligations that the Tenant must perform. In order for the tenant to be released from the lease, the landlord will want the tenant to have fulfilled all their obligations e.g. rent, repair and decoration of the premises, any service charge payments etc.
Additionally, the landlord is likely to agree to the tenant’s early release from the lease, because they are able to find another tenant within a reasonable time. Consequently, the landlord is going to want the premises to be left in a suitable condition and redecorated if required. The landlord will rely on the original terms in the lease that refer to the above being stated in the Deed of Surrender. Thus, any outstanding obligations will be stated in the Deed of Surrender.
Furthermore, the Landlord may be obliged to return some apportionments of money back to the tenant. This may be due to an overpayment of the annual building insurance or overpayment of service charge(s).
Once the Deed of Surrender has been signed by both the landlord and the tenant, it means that both parties have been relinquished from their interests/obligations towards one another under that lease. Thus, it may be worth both parties conducting their own due diligence (i.e. reviewing the lease to see their outstanding obligations) before looking to enter a Deed of Surrender.
Please contact the Property department with any question about the best way to exit a lease early.