You cannot simply walk away
A lease is a binding agreement for the whole term. If you stop paying rent or hand back the keys without the landlord’s agreement, you may stay liable for rent and other amounts, the landlord may claim damages, and any guarantors may be called on. The way out is usually by agreement, or through a right the lease or the law gives you.
The usual ways out
- A negotiated surrender. You and the landlord agree that the lease ends on a set date, usually by a deed of surrender. It should deal with any surrender payment, make good, the return of the security deposit or bank guarantee, and the release of you and your guarantors.
- Assigning the lease. An incoming tenant, often the buyer of your business, takes over the lease with the landlord’s consent. Under a retail lease, the landlord can refuse consent only on limited grounds. Under other leases, consent cannot be unreasonably withheld unless the lease expressly provides otherwise. See assigning the lease.
- Subletting. You stay the tenant and let the premises to a sub-tenant, with the landlord’s consent. You remain liable to the landlord. Under a retail lease, the landlord may keep an absolute discretion over sub-leases.
- A break clause. Some leases let the tenant end the lease early on notice or on conditions. Check the lease for one, and follow its notice requirements exactly.
When the Retail Leases Act lets a tenant end the lease
Under a retail lease, the Retail Leases Act 2003 (Vic) gives tenants specific rights to end the lease in some situations, including:
- No disclosure statement: after giving the required notice, the tenant may end the lease within 7 days after receiving the statement (s 17).
- A wrong or incomplete disclosure statement: the tenant may end the lease within 28 days, subject to the landlord’s right to object (s 17).
- A late or incomplete option reminder notice: the tenant may end the lease from the end of the term or later (s 28).
- Relocation: the tenant may end the lease within a month of the landlord’s relocation notice (s 55).
- Demolition: the tenant may leave on 7 days’ notice once the landlord has given notice of a demolition, and is compensated for fit-out the landlord did not provide (s 56).
The time limits are short and the notices must be right, so get advice as soon as one of these comes up.
If the landlord is in serious breach
A serious breach by the landlord, such as premises that cannot be used for the permitted purpose, or a long failure to repair or investigate a serious defect, may give the tenant rights, including in some cases a right to end the lease and claim damages. Getting this wrong can turn the tenant into the party in breach, so take advice before you stop paying rent or move out.
Mistakes to avoid
- Stopping rent or changing the locks without advice.
- Handing back the keys and assuming the lease has ended. Handing back the keys does not end the lease by itself, so get any agreement with the landlord in writing.
- Agreeing to a surrender that does not release your guarantors or return your security.
- Forgetting the make-good obligation, which can be a substantial cost.
How we help
- Advice on the realistic options under your lease and the law.
- Negotiating a surrender, and the deed of surrender.
- Assignments and subleases, including the landlord’s consent and your release.
- Notices under the Retail Leases Act, within the time limits.
Common questions
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Not unilaterally, unless the lease or the law gives you that right. The usual routes are a negotiated surrender, or an assignment of the lease to an incoming tenant, often on the sale of the business. Both require the landlord’s involvement. We advise on which is realistic in your circumstances and negotiate the terms.
Not by itself. A lease ends early only by agreement with the landlord (a surrender), by a valid termination under the lease or the law, or under a right the Retail Leases Act gives. Until then, rent may keep running. Get any agreement in writing, ideally a deed of surrender.
Often yes, unless they are released. A deed of surrender should release them expressly. On the assignment of a retail lease with the sale of an ongoing business, the tenant and its guarantor are released if the prescribed assignment disclosure statement was given and was accurate.
Law referred to
- Retail Leases Act 2003 (Vic) ss 17, 28, 55, 56, 60 to 63.
- Property Law Act 1958 (Vic) s 144.
- Brotherhood of St Laurence v Sarina Investments Pty Ltd [2024] VSCA 46.
Last reviewed: October 2026, by a Victorian solicitor with a current practising certificate. This page is general information about Victorian law as at October 2026. It is not legal advice about your lease.
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