This is our second post on Surrender. Our first post dealt with an agreement to surrender and the Deed of Surrender itself. In this post we will consider surrender by operation of law.
The term surrender by operation of law is where a person carries out an action or actions which are only permitted if there was a surrender of the tenancy. There the law treats those actions as constituting a surrender.
A surrender by operation of law does not depend on the parties’ intentions but often takes place independently of intention. What is crucial is that there is some act done which is inconsistent with the continuation of the tenancy. The parties must act in such a way that their actions unequivocally amount to an acceptance that the tenancy has ended. In the case of Artworld Financial Corp v Safaryan, where a tenant vacated a property prior to the expiry of the fixed term the tenancy was held to have been surrendered by operation of law when the landlord decided to accept the keys, move into the property and redecorate.
The acceptance of keys does not always amount to a surrender by operation of law. If for example the keys were accepted for the purpose of attempting to re-let in the interest of the tenant, or secure the property against intruders, or by mistake, or to carry out repairs there is no surrender. When a tenant delivers up the keys they must do so to a person authorised to accept them. Furthermore, where the keys are offered the landlord is under no duty to mitigate the tenant’s losses. In practice, if an agent or landlord is given the keys they should make clear immediately that they are not accepting surrender and they should not use the keys to enter the property. If they then decide to accept the surrender, they can take the property back and at that point and the law will hold that a surrender has occurred.
The granting of a new lease by a landlord to a tenant is also a surrender by operation of law if the new lease is to begin during the period of the existing lease. Such a new lease must be valid for there to be a surrender because it is assumed that it cannot be the intention of the parties that acceptance of a bad lease should be a surrender of a good one. Accordingly, the granting of a new tenancy to the same tenant will surrender the old tenancy and replace it with the new one. Likewise, where the tenant asks the landlord to let the property to a third party and the landlord does so, the tenant’s lease is surrendered on the commencement of that new lease.
A variation of a lease could also be a surrender if the variation cannot be carried out without the grant of a new lease. So, for example, if the extent of the demise or the length of the term is increased that is a surrender and re-grant. A rent reduction alone would not be a surrender unless it is accompanied by giving up possession of part of the property in which case a surrender and re-grant will also have occurred.
An invalid notice which is accepted by the parties and acted on as if it was valid will also constitute a surrender as the parties will have shown their intention by the service and acceptance of the notice and their acting on it.
Finally, unlike in our first post a surrender by operation of law does not require a deed or any other written document to be effective.
Surrender by operation of law can be a complex area of law. So, prior to taking any action advice should be sought to determine whether a surrender has taken place and what, if any, further steps should be taken.