Tips on how to surrender a lease
Q. What is the time scale?
A. You could leave tomorrow, but this can place you at huge financial and operational disadvantage. Always negotiate an agreed departure date, with plenty of time in hand. There are no specific rules to govern the lead-in time for departure.
Q. Why am I being ‘fined’?
A. This is discretionary and negotiable. It is to cover a foreseen period of loss of rent and wholesale contribution to the freeholder/owner, on the assumption that the pub will either be empty or have a temporary tenant/manager.
Q. What are my assets?
A. You have three sets of assets: stock and consumables still on the premises; your security deposit; the tenantable inventory. These are all vulnerable and can be destroyed with amazing ease.
Q. Dilapidations — am I responsible?
A. Yes. Insist on an early supply of the terminal dilapidations report.
Check there is no inclusion of an Energy Performance Certificate — it is not required on surrender.
Cross-check to see if the building might be sold (after your departure) as a development site. If that’s the case, there is no need for dilapidations at all.
Price the required building works yourself and negotiate hard over whether or not the work is required. Look out for historic inherent defects that might have been identified, which may not be your responsibility.
The dilapidations report is only one person’s opinion, it is not set in stone and should be challenged.
Q. Can I take a chainsaw to my inventory?
A. Most leases require that the inventory should be maintained and offered back to the freeholder/owner at an agreed value. An orderly departure will give you control over your appointment of a valuer to get the best deal by negotiation.
To attain a full inventory, you must have gas and electrical safety compliance checks undertaken by an approved contractor. Stickers of safety compliance should then be applied to each and every item. No safety compliance checking, no value.
Q. Who values my stock?
A. If you depart suddenly there is no certainty that the stock will even remain in the premises and there will be no agreed value. Stock left in an orderly departure should be correctly valued by a qualified stock taker.
