Termination Pitfalls: Surrender and Abandonment
What happens when a tenant 'holds-over' at the end of a tenancy ? What can a landlord do when a tenant has done a 'moonlight-flit' and appears to have abandoned the premises ? The practical and legal issues of 'surrender' and the ending of tenancies are a frequent cause of confusion. In this feature we examine the issues concerning the surrender of tenancies and abandonment.Case Example
A landlord has been chasing his tenant for rent arrears for some time. The tenant had frequently been behind with the rent and was now three months in arrears. On two previous occasions, the landlord had called at the property and the tenant had been unable to pay.
On the next occasion, the flat appeared to be deserted. The landlord, found the back-door to the property open and the lock damaged. Inside, there was no sign of the tenant and with the exception of a few discarded old clothes, his belongings had been removed. The flat was very messy and some old food remained in the cupboards. The tenant had left no forwarding address and the landlord suspects that the tenant has done a "moonlight flit".
Many landlords, facing the situation described in the case example, would treat the rent arrears as unrecoverable, change the locks and try and get the property cleaned and re-let as soon as possible. Yet despite being already seriously out-of-pocket, the landlord who wrongly interprets a tenant's actions as surrender may find himself accused of committing the offence of unlawful eviction.
A Birmingham landlord facing a similar situation to the example above did just this in 1992. His tenant however returned after being excluded from the property for three days, obtained a mandatory injunction and was able return to the dwelling. The landlord was also fined £1600 for evicting his tenant illegally. (O'Reilly v Webb, 1992)
Surrender
It is useful to recap briefly the provisions of the Housing Act 1988 which relate to termination of the tenancy. The Act provides: (s5(3)) that:If an assured tenancy which is a fixed term tenancy comes to an end otherwise than by virtue of:
- an order of the court, or
- surrender or other action on the part of the tenant
then the tenant is entitled to remain in possession of the dwelling-house
Thus, where it is clear that a tenant has "surrendered" or given up the tenancy, the landlord is entitled to possession. Where the act of surrender is less obvious or equivocal, then care needs to be taken before the landlord takes back or re-lets the property. As we can see from the above example, where a landlord takes possession and it turns out that the tenant is still occupying the property, the landlord runs the risk of proceedings for unlawful eviction.
Unlawful Eviction
The offence of unlawful eviction is committed by a person who unlawfully deprives a residential occupier of all or part of the premises or attempts to do so.1 The court has extensive powers to award damages in tort under the Protection from Eviction Act 1977. More substantial punitive damages can also be awarded under further powers granted by sections 27 & 28 of the Housing Act 1988. Damages for illegal eviction in excess of £30,000 have been awarded in recent cases under these provisions. These serve as a warning to landlords to never try and obtain possession, other than by a court order, unless there has been beyond doubt, unequivocal surrender by the tenant of the premises.Defences
There is a defence: if the defendant can prove that he believed, and had reasonable cause to believe, that the residential occupier had ceased to reside in the premises.2 A mere temporary absence (e.g. on holiday) would not constitute ceasing to reside.
The second defence open to the landlord is that he may offer to re-instate the tenant in the premises from which he has been evicted. Provided that the former tenant is re-instated before the hearing is finally concluded, the landlord is relieved from liability. If the offer is made before the proceedings are commenced and the tenant refuses unreasonably, then damages may be reduced.3
Not surprisingly, the effect of this legislation has been for the well-informed tenant not to accept re-instatement in the majority of cases, but to issue summons as soon as possible against the landlord. Any offer of reinstatement by the landlord is refused after issue of summons and notwithstanding the refusal is unreasonable, the court may not reduce the award of damages. However, the court does have a discretion to reduce the award if the conduct of the tenant, or any person living with him in the premises, was such as to 'mitigate' the damages payable - see section 27(7)(a).What is surrender?
In law, a tenancy is brought to an end by surrender when the landlord and tenant both agree that the tenant should yield up possession of the property to the landlord. This is in fact the usual way by which many assured and assured shorthold tenancies are ended, and so it is important that the process is well understood by landlords and agents.Express surrender
Surrender may be express and this can be done for short leases (less than three years) simply by a written document or a "declaration of surrender". More commonly, however, surrenders are implied or operate as a matter of circumstances - also called "surrender by operation of law".
Where a tenant 'holds-over' despite an express surrender, it will still be necessary for the landlord to obtain a court order to recover possession unless the tenancy is an excluded tenancy (see previous article in LUJ Oct 1997).
Surrender and joint tenancies
If the tenancy is a joint tenancy, all the joint tenants must agree to the surrender for it to be effective.4 Where the tenants owe a substantial amount of rent and one of the joint tenants has been absent for a long period it may be possible to infer that he has given an authority to the others to surrender on behalf of them all.5 But the general rule is that one of two or more tenants cannot surrender a tenancy without the agreement of the other party or parties.
Alternatively, it often occurs that one of the joint tenants wishes to leave, his place being taken by a replacement joint tenant either nominated by the landlord or the tenants themselves. In practice, the vacating tenant will normally surrender in an orderly way, returning any keys to the landlord and collecting the balance of the dilapidations deposit held.
If the vacating tenant does not surrender the tenancy in a formal or orderly way (i.e. he simply disappears) then it will be necessary to consider the rules for surrender by abandonment (see below) before taking possession and re-letting.
When there is an agreement (verbal or otherwise) to substitute a new tenant for the old tenant, this act will in law operate as a surrender and regrant.6 Alternatively, the parties often agree to surrender the original tenancy and formally enter into a new written agreement. Both methods are equally valid. However, simply adding a new person as a joint tenant constitutes an agreement to vary the existing contract and does not operate as a surrender and re-grant.
Fortunately, the introduction of the Housing Act 1996 has removed one of the pitfalls to this process. Previously, it was necessary to insist that the replacement tenancy in such cases should be at least six months due to the risk that the replacement tenant might otherwise gain the protected status of an assured tenant. For replacements agreed on or after February 28th 1997, this is no longer a danger.
Surrender by operation of law
The essence of a surrender by operation of law is the consensual giving up of possession of the premises to the landlord by the tenant.
Thus where the tenant returns the keys to the landlord with the intention of giving up possession of the premises and the tenant accepts them with the intention of accepting possession, there is surrender by operation of law. Equally, surrender can take place (of the old tenancy) when the landlord and tenant enter into a new agreement during the currency of an existing agreement.
For a surrender by operation of law to be implied from the conduct of the parties to a tenancy, their conduct has to be unequivocal, such as returning the keys to the landlord, or removing from the premises all signs of occupation, including furniture, belongings and any family or friends - or animals - who were living with him.7 It is important that the actions of both parties show that they consider the tenancy to be at an end.
However, there is no surrender when the landlord accepts the key 'without prejudice' to see if he can re-let the premises.8
Finally, and most importantly to our example above, surrender may also operate when the tenant has abandoned the premises. The landlord may accept the surrender by changing the locks and re-letting the premises,9 yet great care must be taken; the act of surrender must be unequivocal. It would not be safe for the landlord to always assume that the tenant has abandoned the tenancy; it is possible that the tenant could be in hospital, in prison for a short period, or on an extended holiday.10 In such cases, proceedings for unlawful eviction could be brought by the displaced tenant.
Liability to pay rent
The tenant's liability to pay rent will continue until the landlord accepts the surrender (subject to the natural expiry of the tenancy agreement) and this principle may assist the landlord in obtaining express surrender from a departed tenant who may be motivated to return keys and formally surrender the tenancy rather than incur further debt.
Abandonment
Where does this leave the landlord whose tenant appears to have abandoned the property ?
The outcome hinges around the issue of unequivocal conduct; for surrender to take place or be implied by the actions of the parties, the conduct must be unequivocal in showing that the tenant has given up occupation.
Where there is any doubt that the tenant has given up his occupation, the landlord must follow the statutory procedures to terminate the tenancy and obtain a possession order through the courts. This route can be particularly frustrating for the landlord since in addition to any rent arrears already outstanding, the delays imposed by the legal system will result in further loss of rent whilst the property stands empty.
Abandonment clauses
Some tenancy agreements contain a type of forfeiture clause which allows the landlord to "re-enter the premises if they are left unoccupied for more than 28 days". Such clauses need to be used with care. In practice, this power of re-entry will have little force (unless again it is clear that abandonment has taken place). The rules governing illegal eviction and harassment will always take precedence.
However this type of clause can be very useful if the evidence of abandonment is unequivocal and the landlord can then use the clause to further support his grounds for taking possession.
Unequivocal conduct
In some circumstances, it will be possible for the landlord to take possession of an abandoned property. The courts have determined that for there to be an implied surrender, there has to be 'unequivocal conduct' on the part of both the landlord and the tenant which was inconsistent with the continuance of a tenancy.11
What constitutes 'unequivocal conduct' will clearly depend on the individual facts in a particular situation. When faced with a tenant who appears to have abandoned a property, the landlord will need to make sufficient enquiries so that he can prove that he believed and had reasonable cause to believe that the tenant had ceased to reside in the property.12
Evidence of surrender or abandonment
There are many factors that may point to the fact that a tenancy has been surrendered or that the property has been abandoned. Any evidence collected should be carefully documented in case the action has to be defended.
Some of the factors are quite conclusive (e.g. return of keys) whilst others will hold little weight.
Keys
Where the keys are returned by the Tenant (and the landlord accepts these back with a view to ending the Tenancy) then the Tenancy will normally come to an end by surrender.
Personal effects
The presence of the tenant's belongings or personal effects are probably one of the most important indicators of continuing occupation. An occupier would normally store personal effects (clothes, furniture etc.) at the property . Where a tenant had removed all personal effects at the end of a tenancy, this would generally constitute good evidence that an occupier has ceased to reside.
Rent
The non-payment of rent is not particularly compelling evidence of abandonment. The courts have generally only deemed abandonment to be conclusive on this factor alone when a tenant had disappeared and was in rent arrears for over six months. On the basis of rent arrears alone, normal possession proceedings using the rent arrears grounds would be more effective.
Services
The presence or absence of the various services supplying the property can be very useful pointers as to whether the property is occupied:
Mail - is there unopened mail at the property. Is it being collected ?
Telephone - has the telephone service been terminated ?
Electricity - has the local supply company been asked to terminate the supply ?
The landlord could also rely upon evidence given by milkmen and other delivery services who might have been informed by the previous occupiers that they were leaving the property and that further deliveries were required.
Neighbours
Neighbours are often well aware of the movements of adjacent occupiers and landlord can rely on evidence gathered from such sources. A neighbour may have been on good terms with the tenants and have knowledge of their whereabouts (in which case, it may be possible to verify with the tenant directly that he or she has ceased to reside at the property). Such conversations should be carefully noted and documented.
Housing Benefit
Where rent is paid by Housing Benefit, they will often write to inform the landlord or agent that the tenant is now living at another address. On the face of it, this also seems sufficient evidence for the landlord to take possession (unless there are contrary indications) but this situation has not been tested in the courts.
The landlord also runs the risk of a repayment claim if housing benefits have been overpaid.
Confidentiality issues
An increasing trend to protect privacy and confidentiality of data can increase the difficulty of terminating a tenancy by surrender.
In one case reported to Letting Update Journal, a tenant suffered depression and was eventually taken into hospital for treatment. Although the circumstances showed that the tenant had ceased to reside at the property and was unable to complete the remaining term of the tenancy, the hospital was unwilling to allow the tenant to be contacted so that a written confirmation of surrender could be obtained.
Powers of inspection and entry
It is an implied right13 that the landlord may enter the premises to view the condition and state of repair of the property provided that the tenant has been given 24 hours notice in writing of the intention to do so. Even where there is doubt, it should be assumed that a tenant may be in occupation, and a notice posted or put through the letter box unless there is unequivocal evidence that the property is empty.Where, as in our example, there is evidence of physical damage to the property which renders it vulnerable to trespass or criminal activity, it would be reasonable for the landlord to take steps to secure the property. However, the landlord should ensure that the tenant is informed in writing about the action taken and the reasons for it and provided with directions on how to gain access to the property if the tenant does not have alternative means of access. In this case, the landlord becomes an agent of necessity. A suitable notice should be affixed to the door with information as to how the tenant could obtain new keys.
Case Law
There is plenty of case law covering unlawful eviction but interestingly there are very few cases covering borderline situations where a tenant has vacated, with rent outstanding, and the landlord is seen to act reasonably. This lack of case law suggests that prosecutions are generally brought only where the landlord's actions have been unreasonable.Prosecutions: government statistics
According to government statistics, 177 cases relating to illegal eviction and harassment were taken to Magistrates and Crown Courts in 1995, of which 100 resulted in acquittal or dismissal. Of the landlords convicted, 25% of fines exceeded £500. 57% of offenders were fined under £300.
Guidance
There is little published guidance for landlords in this area. Our research has revealed the following guidance that may be of interest to landlords.Department of Environment:
The North West Landlords' Association posed a similar problem of bandonment to the Department of the Environment. They received a reply from David Curry, then Housing Minister. His advice was in line with the legal position stated in this article. In particular he stated the department's view on several important issues:
'Where a tenant's belongings are still on the premises, it would not be safe for the landlord to assume that the tenant has abandoned the tenancy. ..There are any number of reasons which could explain a long absence without pointing to abandonment.
Where there is evidence in such a case of physical damage to the property which renders it vulnerable to trespass or criminal activity, it would be reasonable for the landlord to take steps to secure the property.'
Small Landlords Association
Where enquiries lead the landlord to believe that a property has been abandoned, the Small Landlords Association recommend:
1. The safest course of action is to apply to the court for a possession order.
2. Obtain written corroboration from other tenants in the property or third parties that the tenant has departed.
3. Re-entry without a court order should only be made in the presence of a reliable and independent person including possibly the local Tenancy Relations Officer if there is one.
4. It can be very important to put a written notice on the tenant's door giving notice to the departed tenant of the landlord's intentions to take over the dwelling (see example notice in inset box at page 18).
5. It can be a useful precaution to insert a provision in tenancy agreements to the effect that it shall be deemed that the tenant has vacated the Property if it has been left unoccupied for more than four weeks without prior notification notwithstanding the landlord taking all reasonable steps to establish contact.
Summary
The law provides little support to the landlord whose tenant abandons the property and the landlord or agent needs to act with great care. Whatever action is taken it will be important to keep documentary notes supporting these measures. Where there is reasonable doubt as to whether a tenant has permanently vacated the premises and it is impossible to obtain express surrender, the safest solution is to terminate the tenancy by some other method and commence possession proceedings.
References
1. Protection from Eviction Act 1977 (PEA), s1(2).
2. Protection from Eviction Act 1977, s1(2).
3. Housing Act 1988, s. 27(6).
NB. This provision only provides a defence to the damages specified in ss27 & 28 of the Act. Damages under PEA 1977 can still be brought.
4. Leek and Moorlands Building Society v Clark [1952] 2 QB 788.
5. (Preston Borough Council v Fairclough (1982).
6. London Borough of Tower Hamlets v Ayinde (1994) 26 HLR 631, CA.
7. Chamberlain v Scalley, 1992.
8. Re Panther Lead Co [1896] 1 Ch 978.
9. R v London Borough of Croydon (1988) 20 HLR 576.
10. Dept. of Environment advice, David Curry, Minister of State, 1996
11. Chamberlain v Scalley, 1992.
12. Protection from Eviction Act 1977, s1(2).
13. Landlord and Tenant Act s.11(6).