Assignment of Existing Leases
It is likely that an existing lease restricts a Tenant's ability to assign their lease subject to the Landlord's consent, which depending on the terms of the lease cannot usually be unreasonably withheld.
The law that applies in this situation is time-specific related to when the application for consent is made so it is best to consult legal advice as soon as such an application from your Tenant is received. If you are the tenant making the application, you should also obtain legal advice before you submit it.
In relation to leases granted from 1996 onwards, an Authorised Guarantee Agreement is also required to ensure that the existing Tenant is not immediately freed of their obligations under the Lease as soon as the new Tenant takes it over. Effectively, the outgoing tenant has to guarantee the performance of the incoming Tenant, usually as a prerequisite to the consent to assign being given. If the new Tenant later defaults, these can be very important documents and so it is important to get advice from an expert at the outset of the assignment.
Security for the obligations of a new Tenant under an assigned lease also frequently requires advice in relation to parent company guarantees or guarantees for individual Tenants and Rent Deposit Deeds.
A few recent projects that our team have been involved in which incorporated the above are:
- The Assignment of a Lease of a car wash site in Clacton-on-Sea together with an Authorised Guarantee Agreement; and
- The Assignment of an Essex pub Tenancy.