UK: Judicial Guidance on Yielding Up Premises

A recent decision of the Chancery Division of the High Court¹ has provided guidance on the yielding up of premises by a tenant at the end of a lease. Prior to that decision there was little clarification of the meaning of yielding up, in case law or in statute.

The subject premises were an office block with surrounding land. The tenant arranged for round the clock security to be provided and additional fencing and barriers to be put in place to deal with security problems. These arrangements remained following the purported determination of the lease term by service of a break notice. The keys to the premises had not been offered up.

The landlord alleged that the lease continued to run because the tenant’s break option had not been properly exercised, as security personnel and fencing remained and that the tenant had not delivered up vacant possession of the premises. The tenant applied to the Court for a declaration that it had served a valid break notice.

The claim turned on whether the tenant had "yielded up" the tenancy within the meaning of the tenant’s break clause. The question raised two issues, one of law and the other of fact. The issue of law was as to the true construction of the phrase "yielding up" in the lease. The issue of fact was whether the claimant had actually "yielded up" the premises in accordance with the phrase so construed. Neither party had been able to find any authority as to what constitutes "yielding up". They agreed that there is no established procedure in law or convention whereby "yielding up" may be accomplished.

The landlord based its argument that the tenant had not yielded up the premises on the following issues:

1. There had been no formal event of "yielding up".
2. The tenant had not handed back the keys of the premises, nor formally offered to do so.
3. The tenant continued at and after the alleged date of termination to instruct a security firm to secure the premises without giving the landlord the option to take over the security.
4. The tenant left in place concrete barriers and fencing which impeded access.
5. The absence of authority as to what constitutes "yielding up" demonstrates that some obvious event which could not be mistaken for anything else is required.
6. The landlord further submitted that it is not for a landlord to make a request of the tenant to return the keys, it is for the tenant to seek out the landlord and ensure that this is achieved.

The tenant’s argument was as follows:

1. Yielding up connotes leaving the premises so that they are available for a landlord to re-enter in circumstances where it is clear that a tenant is no longer seeking to assert any right to the premises concerned.
2. Continuing to hold the keys does not necessarily imply and did not, in fact, imply the assertion of any rights in respect of the premises.
3. Neither the continued instruction of security firms, nor the presence of security guards implied the continued assertion of rights by the tenant in respect of the premises.
4. The concrete barriers had been approved by the landlord and were clearly needed for security but were readily removable and created no hindrance to the landlord in re-taking possession whenever it wanted.
5. A tenant should not be required to go through a futile ritual of offering back keys when a landlord has made it clear that he is refusing to accept the lease is terminated.

• The words "handing back" do not mean the same as "yielding up" because buildings and land are not capable of being handed back in the literal sense of the words.
• There is no prescribed way to yield up.
• The Court must look objectively at the facts and establish whether a clear intention had been shown to terminate a lease and whether a landlord could go into occupation without difficulty.
• It is not essential for a tenant to return keys in order to yield up premises. However, it is a wise precaution to at least symbolically tender keys, even if a landlord would be likely to refuse to accept them.
• The continued presence of security staff and temporary barriers did not hinder the landlord’s return to occupation.

Each case will turn on its own facts. The decision of the High Court provides useful guidelines. However, in order to avoid a dispute arising, tenants should be seen to hand back the premises in a clear and unambiguous way. Where possible, this should include giving up the keys to the landlord.

© RadcliffesLeBrasseur

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.