Lease variations—surrender and re-grant issues

The following Property practice note provides comprehensive and up to date legal information covering:

  • Lease variations—surrender and re-grant issues
  • Variations ‘increasing’ the demise or ‘extending’ the term
  • Variations increasing or reducing the rent
  • Variations decreasing the demise or term
  • Consequences of inadvertent surrender and re-grant
  • Consequences for landlord
  • Consequences for tenant
  • Position where reversion or lease is charged
  • Reversion is charged
  • Lease is charged
  • More...

Lease variations—surrender and re-grant issues

A surrender and re-grant by operation of law can occur if an agreed variation of the terms of a lease is so fundamental that the law regards it as being wholly inconsistent with the original lease. The original lease is deemed to have been surrendered and a new lease is deemed to have been granted between the parties on the terms of the lease as varied.

An inadvertent surrender and re-grant can have significant adverse consequences for both the landlord and the tenant—see ‘Consequences of inadvertent surrender and re-grant’.

This Practice Note covers:

  1. variations to the lease terms that do, or do not, trigger surrender and re-grant by operation of law, including:

    1. ‘increasing’ the demise or ‘extending’ the term

    2. ‘decreasing’ the demise or term

    3. increasing or decreasing the rent

  2. consequences of an inadvertent surrender and re-grant

  3. how to ‘extend’ the term or increase the demise without triggering a deemed surrender and re-grant

  4. how to deal with changes required to a lease plan to avoid surrender and re-grant

Clients and agents often agree commercial changes to a lease and instruct lawyers to ‘vary’ the terms of a lease. If instructed to deal with a change to lease terms, lawyers must:

  1. be live to the potential risk that a variation may trigger surrender and re-grant by operation of law—particularly if instructed to ‘extend’ the

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