A Surrender of Lease is required where both parties agree that the existing Tenant is to be discharged from its obligations under the existing lease on certain conditions.
If a tenant does not validly exercise its option, or does not continue in possession of the premises in accordance with the over-holding provisions of the existing lease, then no surrender of lease is required. A surrender of lease is however required where a tenant requests, and the landlord agrees, that the tenant and/or guarantors will be released from the obligations under the lease in certain circumstances. This might occur when the landlord does not wish to agree to a sub-lease.
It is important that a landlord not hand over a surrender of lease, which has been signed or executed by it, until such time as all of its requirements have been met, all outstanding rent and outgoings paid, and if in the case of a new tenant taking possession a new lease has been received and executed correctly by the new tenant. Costs of the surrender of lease are often paid by the tenant who wishes to be removed from its obligations under the existing lease or any proposed assignment.