What a surrender is
A surrender ends a lease before its term expires: the tenant gives the lease back and the landlord accepts it. It is different from termination for breach, and from an assignment, where someone else takes over the lease. A tenant cannot surrender on its own. The landlord must agree, and it can set conditions. For the other ways out of a lease, see ending a lease early.
Two ways a lease is surrendered
By agreement, usually by deed
Most surrenders are express, by a deed of surrender that fixes the end date and deals with everything outstanding. Under the Property Law Act 1958 (Vic), a surrender is a conveyance, and a conveyance of a legal interest in land is generally void unless made by deed (ss 18 and 52(1)). If the lease is registered on the title, the surrender is registered by lodging an instrument in the approved form, which the landlord and the tenant must both agree to (Transfer of Land Act 1958 (Vic) s 69).
By operation of law
A lease can also be surrendered without any document. Generally this happens when both parties act in a way that is inconsistent with the lease continuing: for example, the tenant moves out and returns the keys, and the landlord accepts them by re-letting or occupying the premises. The Property Law Act’s deed requirement does not apply to a surrender of this kind (s 52(2)(c)). Whether one has happened depends on what both sides did, so disputes are common.
What a deed of surrender should cover
- The parties. The landlord, the tenant and every guarantor, so the releases bind and protect each of them.
- The surrender date. When the lease ends, when vacant possession is given, and how keys and access cards are returned.
- The surrender payment. Who pays whom, how much and when, and whether the figure includes GST.
- Rent and outgoings. What is payable up to the surrender date, and how outgoings are adjusted once the year’s actual figures are known.
- Make good. Whether the tenant must still make good, does part of the work or pays a sum instead, and who owns fit-out left behind. If the lease and the deed are silent, a tenant may remove fixtures it paid for only before the lease ends (Property Law Act 1958 (Vic) s 154A). See make good.
- Security. When the deposit or bank guarantee is returned, and what may be deducted first. Under a retail lease, a deposit must be returned within 30 days after the lease ends if the tenant has performed all its obligations (Retail Leases Act 2003 (Vic) s 24). See security deposits and guarantees.
- Releases. The landlord releases the tenant and guarantors, and the tenant releases the landlord from its claims, for example over repairs or outgoings. Each release should say what is excluded.
- Costs. Who pays the legal costs and any registration fees.
A surrender ends the lease from the surrender date, but liabilities that had already arisen, such as unpaid rent or an existing breach, can survive unless the deed releases them.
If the premises are sublet
Generally, surrendering your lease does not by itself end a sub-lease you have granted. The Property Law Act 1958 (Vic) treats the next estate, usually the landlord’s, as the reversion on the sub-lease, preserving its incidents and obligations (s 139). The deed should deal with the sub-tenant expressly. See subleasing.
GST and stamp duty
A surrender payment can have GST and income tax consequences for both sides. The deed should say whether the payment includes GST, and each party should confirm the tax treatment with its accountant.
General duty on leases in Victoria was abolished from 26 April 2001, and for most leases a surrender attracts no duty. The exception is a lease that is itself dutiable property under the Duties Act 2000 (Vic): broadly, a lease granted for a premium or other consideration beyond the rent, or transferred or assigned for consideration (ss 7(1)(b)(v) and (va) and 10(1)(ab)). Surrendering a lease of that kind is a dutiable transaction, the landlord is liable for the duty, and the dutiable value can be the unencumbered value of the land rather than the surrender payment (ss 7(1)(b)(ii), 8, 12 and 20(3)). If a premium or price was paid for the lease, check the duty position before signing.
Negotiating a surrender
What a landlord asks for usually depends on how quickly it can re-let, at what rent, and the cost of making the premises lettable again.
- Keep paying rent and complying with the lease until the deed is signed. Stopping early weakens your position and may give the landlord grounds to end the lease and claim damages.
- Offer what the landlord values: a payment, a replacement tenant, a fit-out the next tenant can use, or a date that suits re-letting.
- If the landlord wants the premises back, for example to redevelop, you may have more to bargain with. Under a retail lease that allows termination for demolition, the landlord must give at least 6 months’ notice and pay reasonable compensation for fit-out it did not provide (s 56). See relocation and demolition.
- Sign the deed before you hand over the keys.
The landlord's side
- Compare the alternatives. If a tenant abandons the premises, the landlord may be able to end the lease and claim damages, including rent lost over the rest of the term (Progressive Mailing House). But the claim is limited to loss the landlord could not reasonably avoid, usually by re-letting, and is only worth what the tenant and guarantors can pay.
- Be careful before re-letting. Taking back the keys, changing the locks or re-letting without a signed deed may be treated as accepting a surrender, which can end the tenant’s liability for rent from then on. Get advice first if you intend to claim damages.
- Settle the figures first. Agree arrears, outgoings and make good before the surrender date, and decide whether to hold the bank guarantee until the make good is done.
- Mortgagee consent. Many mortgages require the lender’s consent to a surrender. Check yours before you sign.
- The next lease. If the premises will be let again as retail premises, the new lease needs a disclosure statement at least 14 days before it is entered into (Retail Leases Act 2003 (Vic) s 17). See our guide to the Retail Leases Act.
How we help
- A free 15-minute phone call about whether a surrender is realistic and what to offer or accept.
- Preparing or reviewing the deed of surrender, including releases, security and make good, and the surrender instrument for a registered lease.
- Negotiating the terms, and for landlords, advice before re-entering or re-letting.
Common questions
Can’t see your question? Call 1800 776 529 or send us a message.
A deed signed by the landlord, the tenant and usually the guarantors that ends the lease on an agreed date. It deals with any surrender payment, make good, the return of security, and the releases each side gives.
Yes. A surrender needs the landlord’s agreement, and it can set conditions, such as a payment. If it refuses, consider an assignment or a sublease.
Usually not. Duty applies only if the lease is dutiable property under the Duties Act 2000 (Vic), broadly a lease granted for a premium or assigned for a price. Then the landlord is liable, and the duty can be calculated on the value of the land.
Not necessarily. A guarantor may remain liable for amounts already owing at the surrender date. The deed should release the guarantors expressly, and they should sign it.
Law referred to
- Retail Leases Act 2003 (Vic) ss 17, 24 and 56.
- Property Law Act 1958 (Vic) ss 18 (definition of conveyance), 52(1) and (2)(c), 139 and 154A.
- Transfer of Land Act 1958 (Vic) s 69.
- Duties Act 2000 (Vic) ss 7(1)(b)(ii), (v) and (va), 8, 10(1)(ab), 12 and 20(3).
- Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17.
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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