Surrendering To Sense: Lease Surrenders And Implications

The recession has seen an increase in the number of lease surrenders. As ever, it is important that landlords and tenants are aware of the implications of entering into such a transaction. Among other things, it is important to note the following:

Mortgage: a mortgage will survive a surrender. Unless the appropriate arrangements for discharge are made (or certificates of non-crystallisation are given the case of floating charges), a landlord will become liable for the mortgage.

Underleases: a landlord will take a surrender subject to any underleases that exist, regardless of whether they were granted by the tenant in breach of covenant. The landlord may therefore want to double-check terms of the underlease. Inspection: it is prudent to carry out an inspection of the property to reveal any unauthorised occupiers or overriding interests that may exist as, following completion, the landlord will take the property subject to these. In addition, an inspection will give