Whether a landlord has accepted a surrender of a lease will depend more on the landlord’s actions rather than its intentions or what it says.
In Artworld Financial Corporation v Safaryan2, a substantial house in Holland Park was let to the Safaryan family at a rent of £390,000 per year. The family was unhappy with the house and left in 2006, midway through their lease. The Safaryans said that the central heating and swimming pool did not work properly and, notwithstanding their complaints, the problems were not fixed by Artworld, as they should have been under the lease.
The Safaryans returned the keys and the landlord claimed payment of rent for the outstanding period of the lease. The Safaryans said that, notwithstanding the position being put forward by Artworld’s solicitor that the lease was continuing, Artworld’s conduct showed otherwise. The Safaryans argued that Artworld had accepted a surrender of the lease as the property was redecorated, works were carried out and members of the landlord’s family were living there.
The judge found that, notwithstanding the position put forward in solicitor’s correspondence that the lease was ongoing, the conduct of the landlord was such as to accept a surrender of the lease.
The landlord, when the Safaryans moved out, began to occupy the property for its own benefit. Keys had been accepted, repairs were carried out and more importantly, members of the family, which owned the landlord company, began living there.
Care is always needed when keys are accepted. Just because correspondence puts forward the position that there has been no surrender, it is the conduct of the landlord that will be important.
Queries are often raised as to whether a landlord can take steps to secure or preserve the property. Also, we are often asked whether steps can be taken to market the premises without accepting a surrender. Self-help remedies, to protect and preserve the property, will usually not amount to a surrender as they are preserving the landlord’s property and will be seen as a reasonable response to the failure, by the tenant, to perform its obligations under the lease. Equally, the landlord taking steps to keep the garden tidy, for example, is not necessarily inconsistent with an ongoing landlord and tenant relationship. Furthermore, the landlord’s seeking to re-let the premises will not necessarily give rise to a surrender by operation of law, as it is no more than what the landlord might reasonably be expected to do in the circumstances for the potential benefit of all parties. The landlord must be entitled to seek to mitigate the damage caused by the tenants abandoning the lease, by seeking to obtain another tenant.
However, if the landlord goes further and uses the premises for his own benefit beyond the totally trivial then, as the Court of Appeal found, it re-takes possession of the premises inconsistently with the continuance of the lease. This will give rise to a surrender.
If in doubt, advice should be taken regarding whether conduct amounts to a surrender of the lease. In the current climate, and particularly with exposure to the rates liability for empty units, caution is required.
2 Artworld Financial Corporation v Safaryan & Others [2009} EWCA Civ 303