The surrender of a commercial business lease can take place in two ways:
1. Formally by Deed: this is called an Express Surrender
2. By Operation of Law: this is called an Implied Surrender.
A Surrender of a lease by this method is determined where the conduct of both parties to the lease is inconsistent with the terms of the lease. For example, the Tenant may leave occupation of the premises and the Landlord may take over possession of the premises. The Landlord must show a clear intention to accept the surrender of the lease, and the parties’ conduct is looked at objectively.
On a surrender the rent ceases and the Tenant is released from their liability for the covenants in the lease. However, where the surrender does not expressly take place by Deed, both parties remain liable for breaches arising before the surrender. This is why it is important for the Deed of Surrender to be carefully drafted to include terms that settle any outstanding breach.