Leases: disposal: surrender of a lease: introduction
A lease is said to be ‘surrendered’ when it is disposed of to the holder of the immediately superior interest in the property. For example, if the freeholder has granted a lease of a property, and the holder of that lease has granted a sub-lease:
- the holder of the original lease could surrender it to the freeholder, or
- the holder of the sub-lease could surrender it to the holder of the original lease
However, if the holder of the sub-lease disposed of it to the freeholder, that would be an assignment rather than a surrender.
The surrender of a lease involves both the disposal of that lease by the tenant and the acquisition of it by the landlord. This is the case even though when a lease is surrendered, it normally merges with the superior interest and ceases to exist.
The general rules which apply to disposals of leases, see CG71100-CG71210, apply equally to surrenders. In particular, if the surrender is between connected persons, see CG14560+, or is not at arms length, the disposal and acquisition will be deemed to have taken place at market value, see CG14530+.
However, certain special rules apply to surrenders:
- extensions of leases: ESC/D39, see CG71240-CG71243
- consideration for surrender of lease: release from certain obligations, see CG71260
- sum paid by landlord to procure surrender of lease, see CG71262
- sum paid by tenant to effect surrender of lease, see CG71264
- sum received by landlord for accepting surrender of lease, see CG71280.