Surrender by operation of law

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

  • Surrender by operation of law
  • Lease covenants
  • Protecting the property
  • Re-letting
  • Variations causing surrender

Surrender by operation of law

A surrender by operation of law (or ‘implied surrender’) occurs when the unequivocal conduct of both parties is inconsistent with the continuation of the tenancy. This is demonstrated by the delivery of possession by the tenant and acceptance by the landlord.

When a surrender by operation of law occurs, the tenancy and all future tenant or guarantor liabilities end. Liability for past breaches of covenant will remain in the absence of any release.

The landlord must have the intention to accept the surrender. The High Court in Padwick v Punj Lloyd emphasized that the unequivocal conduct of both parties is required—a tenant cannot unilaterally divest itself of its obligations under a lease. See News Analysis: A reminder of what constitutes a surrender by operation of law.

The parties' actions are considered objectively. The test is whether the landlord’s conduct is ‘so’ inconsistent with the continuation of the tenant’s lease that it could only be justified as being lawful on the basis that the landlord has accepted the tenant’s implied offer to give back possession, and has taken possession of the premises beneficially for himself.

The delivery and acceptance of the keys alone is not sufficient. As a matter of practicality and common sense, one party has to hold the keys to prevent an absurd

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