Why is a deed of surrender used?
A deed of surrender only comes into effect after mutual agreement between the tenant and the landlord, even though their reasons for terminating the lease may not be the same. These can include:
- The tenant needing to vacate the premises for any reason, such as inability to pay the rent. In this case, an alternative to consider is transferring the lease to a new tenant.
- The tenant seeking to restructure their business, such as from a sole trader to a company, and transferring the lease to the new business entity.
- The tenant requiring a larger premises, in which case they can be granted a lease to a new property the landlord owns.
- The landlord wanting the premises vacant so they can either redevelop or sell the premises.
The surrender document outlines the mutual agreements between both parties, and ties up any loose ends based on property legal advice. It ensures that neither party holds any further legal responsibilities once the lease is fully terminated.
Things to consider before drafting a deed of surrender
Most Melbourne property lawyers will tell you that every deed of surrender outlines certain key agreements that both the landlord and the tenant must agree to. These include:
- The date on which the tenant agrees to vacate the property.
- The ‘Make Good’ clause: that the tenant leaves the property in the exact condition it was provided to them. If the lease includes a clause for the tenant to repair any damages they caused, these must be settled first.
- Settlement of outstanding dues. This includes any security deposit the tenant paid, stamp duty on the premises, or outstanding rent and outgoings. If the landlord made any deductions to your deposit, seek property legal advice to ensure they are justified.
- A mutual indemnity clause that protects both the landlord and tenant from any further legal claims relating to the lease and the premises.
- A surrender fee, i.e. any payment the tenant is required to make to the landlord for early termination of the lease.
- Any legal fees required to pay by the landlord for drafting the deed of surrender.
Once all of these agreements have been discussed and agreed upon, both parties are required to consult their choice of Melbourne property lawyers to prepare the document. This is then reviewed and signed by both the landlord and the tenant, once all fees have been settled.
Make sure your agreement protects you
The most important function of a deed of surrender is to outline the rights of each party once a property has been vacated. It ensures that both the tenant and landlord protect themselves against any claims the other party may make and enact a fair release. Ensure that all conditions and clauses are clear and reasonable, with proper communication and property legal advice. Make sure to go over the terms of the original lease to ensure every outstanding duty has been fulfilled before initiating surrender.
Get advice for property disputes from P&B Melbourne Property Lawyers
If you’re looking to terminate your lease early as a tenant, or you’re a landlord looking to draft a deed of surrender, you’ll need solid property legal advice to ensure all terms and conditions are met.
For all disputes relating to property grants, duties and releases, contact P&B Law today. Our expert Melbourne property lawyers will make sure the property transfer and release process is efficient and hassle free.