Guide to our Deed of Surrender of a Lease Template

Posted by Stephen on 20th April 2015

This abbreviated guide explains how to complete Legalo’s Deed of Surrender of Lease template, which should be used where the landlord and tenant have agreed to terminate the lease early. For a lease that is registered at the Land Registry, you can use a TR1 to surrender it, but most parties prefer to use a deed of surrender as it is a more appropriate form to use as a starting point (and indeed it is recommended by the Land Registry). (The full guide comes with the template when you purchase it.)

Our template deed of surrender has various options built in, so it works if:

1. the obligations of the tenant in the lease were guaranteed by another person or not;

2. the lease has been registered with the Land Registry or not;

3. the Landlord & Tenant (Covenants) Act 1995 classes the lease as “old” or “new”; or

4. the tenant has security of tenure (i.e. the right to extend its lease as it expires) or not.

This template is meant for surrendering the whole of the leased site, but with suitable adaptation it can be used as a surrender of part of the leased site.

If alternative premises are being granted to the tenant along with the surrender, do this in a separate document (to be signed at the same time as the surrender deed) by a separate lease for the alternative premises. A lease template can be downloaded from Legalo’s website.

For leases registered at the Land Registry

If the lease was originally registered, the landlord can close the Land Registry title for the lease using a form TR1 (signed by tenant and landlord) instead of a deed of surrender signed by both, but the Land Registry themselves recommend a deed of surrender is used, such as our template. You will also need a form AP1 as your application to the Land Registry (downloadable from the Land Registry’s website for free). You register it and pay the applicable Land Registry fee. The fees are shown here: https://www.gov.uk/guidance/land-registry-registration-services-fees#leases

For further details on how to register it with the Land Registry, see: https://www.gov.uk/government/publications/leases-determination/practice-guide-26-leases-determination#determination-on-surrender-by-deed. See in particular part 4 and, for the payment of Stamp Duty Land Tax on surrender (or SDLT), see part 4.2.

If the tenant is not paying the landlord a fee for accepting the surrender, then it may be that it falls into the category of “not requiring notification to Her Majesty’s Revenue and Customs” and therefore not needing any SDLT to be paid. If so, you include a note explaining why it does when applying to the Land Registry for the surrender to be registered.

Clauses in the Deed of Surrender of Lease

Land Registry – Complete the details of the registration that apply if the freehold title or the lease are registered, deleting the bits that are not relevant.

Date – Type in only the year for now, then fill in the rest once the agreement has been signed.

Party clauses – Complete the details of the landlord (party 1), the tenant (party 2), and, if the lease was guaranteed, the guarantor (party 3), or, if not, remove party 3.

Background

(B) This paragraph can be deleted if the lease was not guaranteed.

Numbered clauses in the Deed of Surrender

1. Interpretation – In this clause we explain the principal terms in the template.

  • Guarantee – where this applies, complete the relevant details for the guarantee. If the lease contains the guarantee, then the definition can be deleted.
  • Lease – complete as applicable.
  • Property – the premises’ address should be filled in.  If the leased unit is not the entire building, set out what part was let.
  • Rent – if there is still rent to be paid to the landlord in accordance with clause 5.1.2 or rent to be refunded to the tenant in accordance with clause 3.1, then keep this definition. If neither applies, then it can be deleted.
  • Service Charge – if there is part of the service charge to be refunded to the tenant in accordance with clause 3.1, this definition should be used. If not, then it can be deleted.

2. Surrender – For 2.1.1, if a payment is being made be landlord to tenant or vice versa, then fill in the details.  NB VAT would not normally apply to such a payment, unless the party receiving the payment has opted to tax the property to VAT, in which case that party should produce a VAT invoice for the party making the payment.  If there is no such VAT here, it would be best to specify this. In clause 2.1, if clause 4.2 doesn’t apply, delete the reference to it here.

3. Refund of advance rent, etc – If there is any rent and or service charge to be refunded by agreement, then complete the details. Otherwise, delete clause 3.

4. Releases – This clause provides for the parties to release each other. If there is no guarantor, delete 4.2. If there is a guarantor, then in clause 4.2 select the correct document that contained the guarantee: either the Guarantee as defined in clause 1.1 or the Lease.  When there are actual or potential liabilities (including ones perhaps unknown at present to one or more of the parties) that have not been paid for (e.g. for breaches of the lease), then keep the words at the end of clauses 4.1, 4.2 and 4.3 where applicable.

5. Payments – If the landlord it to be paid by the tenant for the surrender, then insert the details in clause 5.1.1. If the tenant owes some rent or other money to the landlord, e.g. for service charges or in compensation for repairs or redecoration that it has not carried out (called “dilapidations”) then fill in the details in clause 5.1.2.  If neither applies, delete all of clause 5.

6. Documents and the Land Registry – If the lease registered at the Land Registry and/or noted against the landlord’s title, you need to register the surrender. Delete clause 6 if neither the lease, nor the landlord’s freehold title, have been registered at the Land Registry. If keeping the clause, note in clause 6.1.2 if any other documents that need to be given to the landlord or if the tenant must pay the applicable registration fees the Land Registry will charge.