Deed of surrender
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Deed of surrender is a document that transfers ownership of the property for a certain time period. It describes conditions under which such a transfer is possible. It is sometimes called end of tenancy agreement. The deed of surrender is used when a landlord and tenant agree to terminate lease early. It makes easier the process of discharging responsibilities by both parties.
Deed of surrender is possible if both parties are on good terms. But in case of breaching the contract ending it becomes more complicated.
It is a document which allows parties (a tenant who rents a property and a lessor who is the owner of a property) to resign from a lease agreement. When deed of surrender is signed, a lease agreement between parties ends earlier than it was first stated in a tenancy agreement. A deed of surrender concerns any type of commercial property lease and allows parties to terminate it or to release a tenant and a lessor from their lease obligations under certain conditions. A deed of surrender outlines all the rights and responsibilities of a tenant and a landlord.
In order to ensure equitable conditions for parties, a deed of surrender can be reviewed by a lease lawyer. A deed of surrender is signed by a lessor and a tenant, which is witnessed by a notary public [1].
Conditions in deed of surrender
The usual conditions are:
- tenant will pay all rent to certain date
- tenant will return property in good state
- both parties release each other from any claims after the date
- responsibility for removing registered lease (if registered)
- responsibility for paying the legal costs [2]
When it is used?
A deed of surrender is applicable only if both parties (a lessor and a tenant) agree on its conditions. The conditions of a deed of surrender usually require a tenant to return a property to a landlord in exactly the same condition as it was before a tenant leased a property: the place should be left clean, all the possible defects which are the results of a tenant activities should be fixed and all the appliances or furniture which do not belong to a lessor should be removed.
A deed of surrender states exactly when a tenant should leave the property which was an object of a lease. The time for any necessary actions such as renovation, appliances or furniture removal will also be stated in a deed of surrender.
Another important requirement is mutual decision of a tenant and a landlord to release themselves from any financial claims. If an agreement between parties included a deposit paid by a tenant, a deed of surrender should state whether it should be fully or partially returned by a lessor. There is also a possibility of an agreement which does not require a lessor to return any money which were paid as a deposit.
All the above-mentioned requirements have to be met before the surrender date. The surrender date is the date when a deed of surrender starts to be in operation. After the surrender date the conditions of a lease agreement are no longer valid. A deed of surrender cancels all the obligations which were the results of tenancy agreement. All the further duties and obligations resulting from a lease agreement cancellation are stated in a deed of surrender [3].
The preparation process
A deed of surrender is a legal document which requires both parties to discuss some practical aspects of its preparation such as preparing and delivering notices or paying legal costs (a deed of surrender preparation is not free). It is very crucial to divide the roles and costs among a tenant and a landlord and to state who is responsible for fulfilling the abovementioned tasks. This type of agreement usually includes an information about GST payment and laws and jurisdictions connected to the contract. The document contains also the information about the financial obligations which were fulfilled by a tenant [4].
Resignation and consequences
A very common situation when parties decide to enter a deed of surrender is when a tenant and a landlord want to resign from a lease agreement, for example when a tenant wants to start a business activity with a changed entity name.
Signing a deed of surrender can also be beneficial for a lessor who wants to regain full rights to the property in order to have it for personal use or to let it to another person or company. Parties commonly agree on a deed of surrender in a case when their cooperation is so far impeccable. For example, it is most likely that a lessor will not agree to sign a deed of surrender when a tenant owes him or her some amount of money for a lease.
A deed of surrender is a document which states that parties fulfilled their obligations outlined in a lease agreement until the time when they both agreed on ending their cooperation earlier. In a situation when a tenant owes some money to a landlord the conditions of a lease agreement are fulfilled only partially, by a lessor and not by a tenant [5].
Examples of Deed of surrender
- A deed of surrender is used when a landlord and tenant mutually agree to end a lease early. This deed outlines the agreement between the two parties and outlines the conditions of the surrender. It also states when the tenant will vacate the premises and the payment of any outstanding rent or fees.
- A deed of surrender may be used when a borrower defaults on a loan and the lender wishes to take possession of the property. This deed outlines the terms of the surrender and the repayment of the loan. It also states the date when the lender will take possession of the property.
- A deed of surrender may be used when a business owner wishes to transfer ownership of a business to another. This deed outlines the conditions of the transfer and the payment of any outstanding debts or fees. It also states the date when the transfer will take effect and when the new owner will take possession of the property.
Advantages of Deed of surrender
A deed of surrender has many advantages for both the tenant and the landlord. It can provide clarity, security and a smooth process for both parties. Here are the main advantages:
- Clarity: The deed of surrender provides a clear outline for both the tenant and the landlord of the terms of the surrender of lease and the responsibilities of each side. This can help to ensure that there is no potential for confusion and misunderstanding.
- Security: By providing a clear and legally binding document, the deed of surrender can provide security for both parties. It will ensure that both parties have their obligations and rights clearly outlined, and that any disputes or misunderstandings can be addressed quickly and easily.
- Smooth Process: The deed of surrender helps to make the process of terminating the lease easier and smoother. Both the tenant and the landlord will have a clear understanding of their obligations and can avoid any unnecessary delays or disputes.
- Cost Savings: The deed of surrender can also help to save costs for both parties as it ensures that any costs associated with the termination of the lease are covered.
- Flexibility: The deed of surrender also provides flexibility for both the tenant and the landlord. It can be used to negotiate the terms of the surrender of the lease, including the amount of notice required, the amount of rent due, and other conditions that may be relevant.
Limitations of Deed of surrender
A deed of surrender can be a useful tool when both parties agree to terminate the lease early, but there are some limitations to be aware of.
- A deed of surrender only applies to leases that have been written down and formally agreed upon in writing. It does not cover verbal agreements or any other type of agreement.
- The deed of surrender must be signed by both parties, and the tenant must give up all rights to the property.
- It is only effective if it is registered with the local land registry, which can be a lengthy and expensive process.
- The deed of surrender does not cover any outstanding rent or other liabilities. The tenant may still be liable for these after the deed of surrender has been signed.
- If the tenant breaches the terms of the deed of surrender, the landlord is still able to pursue any legal remedies such as eviction.
- The deed of surrender cannot be used to change the terms of the lease, such as rent payments or length of tenancy.
A Deed of Surrender is an important document that transfers ownership of a property for a certain period of time. Other approaches related to this document include:
- Lease Agreement – This is another important document that outlines the rights and responsibilities of both the landlord and tenant in a rental agreement. It typically includes details such as the length of the tenancy, the amount of rent, and the duties of the landlord and tenant.
- Early Termination of Lease – This is a process in which a tenant and landlord mutually agree to terminate a lease agreement before the original lease term is up. This may be done through a negotiated Deed of Surrender or by other means.
- Rent Increase – A rent increase is a change in the amount of rent being paid on a property. This may occur due to market conditions, inflation, or other factors. A landlord may also increase rent if the tenant has been in the property for an extended period of time and the rent has not been adjusted accordingly.
In summary, the Deed of Surrender is a document that transfers ownership of a property for a certain period of time, and there are a variety of other approaches related to it, such as a lease agreement, early termination of lease, and rent increase.
References
- Arnott R., Shevyakhova E. (2014) Tenancy Rent Control and Credible Commitment in Maintenance "CESifo Working Paper No. 4608" s. 2-5.
- Fulda C. (1940) Surrender of Documents of Title on Delivery of the Property] "Cornell Law Review" s. 203-206.
- Moskovitz, M. (2016). Two New Case Developments in Landlord-Tenant Law"Golden Gate University School of Law, GGU Law Digital Commons".
- Law W.&M. (2010) Property as/and Constitutional Settlement "William & Mary Law School Scholarship Repository" s. 1372-1381.
- Tsoa-Lee T., Lee M. (2005) System and Method for Creating and Implementing Alease Agreement "United States Patent Application Publication" s. 1-5.
Footnotes
Author: Agata Janusz
