4.3 Lease Termination

Question 1

What may be payable on surrender

Answer 1

Premium from one party to another

Question 2

What must be included in A2S if contracting out of ‘54 Act

Answer 2

Confirmation that procedure carried out

Question 3

Why might L delay notification to T that has not validly exercised break clause

Answer 3

Delay until too late to exercise if want T to stay

Question 4

If new T coming in + OT surrendering, how can you link the two

Answer 4

A4L conditional on surrender + A2S simultaneously exchanged w/ A4L

Question 5

Two ways of expressly surrendering

Answer 5

Deed or TR1

Question 6

How do you impliedly surrender

Answer 6

Handing in keys + vacating

Question 7

Three ways for lease to terminate otherwise than by expiry of fixed term/service of notice under ‘54 Act

Answer 7

Forfeiture, surrender and break clause

Question 8

What should payor ask for if has to pay VAT on surrender premium

Answer 8

VAT invoice, copy of option and HMRC receipt

Question 9

Why will L want 4(1)(b) LP(MP)A to apply to surrender

Answer 9

T covenants no subsisting breaches, so if any breaches, L has right of action for T breaching

Question 10

Who can usually exercise break clause

Answer 10

Either party

Question 11

When will leasehold title have to be closed after surrender

Answer 11

If lease reg, i.e. over 7 years

Question 12

What should L do if T has not validly exercised break clause

Answer 12

Contact T to explain lease not terminated and continue to comply w/ covenants

Question 13

Overpay rent break clause

Answer 13

M&S v BNP

Question 14

When will issues with SoT arise in surrender

Answer 14

If using A2S and CT’s lease is protected by ‘54 Act

Question 15

Case on conditions of break clause

Answer 15

Mannai v Eagle Star

Question 16

What is the effect if A2S + CT protected by ‘54 Act + simple/statutory declaration not done

Answer 16

A2S is void (38A(4)) as unlawful attempt to exclude the Act

Question 17

What case shows that you have to expressly provide for ability to recover overpayment of rent on exercise of break clause

Answer 17

M&S v BNP

Question 18

Three post-completion formalities after deed of surrender executed

Answer 18

Close leasehold title, apportion rental payments and recover shortfall/refund overpayments of SC

Question 19

Issue with L delaying notification that T has not validly exercised break clause

Answer 19

If challenged, court unlikely to look favourably on it

Question 20

When might VAT be chargeable on surrender premium

Answer 20

If ‘supplying’ party (receiving the premium) has opted to tax

Question 21

What liabilities will L want discharged on surrender

Answer 21

Only future

Question 22

Mannai v Eagle Star key

Answer 22

Break clause

Question 23

Can T surrender w/o L’s consent?

Answer 23

No

Question 24

What case shows that minor errors in exercising break clause that would not mislead reasonable person will not render notice invalid

Answer 24

Mannai

Question 25

If CT covered by '54 Act but using A2S, what is the procedure

Answer 25

Same as for A4L - statutory/simple declaration (14 days) before entering into A2S

Question 26

M&S v BNP key

Answer 26

Overpay rent break clause

Question 27

If lease is protected by '54 Act, when will lease naturally terminate

Answer 27

By service of a notice under the Act

Question 28

Two ways of surrendering

Answer 28

Expressly or impliedly

Question 29

If lease if not protect by '54 Act, when will it naturally terminate

Answer 29

Expiry of fixed term

Question 30

When will payor have to pay VAT on surrender premium

Answer 30

If surrender documentation states as much