Are you a commercial tenant?
If you're a commercial tenant and your landlord agrees for you to assign your interest in the lease to someone else (“an assignee”) this doesn't mean you'll be automatically released from the obligations under the lease even though the law provides for a tenant to be released on assignment.
Whether or not you will have any continuing liability will depend on several factors, including what type of lease you have.
Authorised Guarantee Agreement
More often than not, you'll be asked on an assignment to enter into an authorised guarantee agreement (also called an AGA) with the landlord.
This means that you will be required to guarantee the performance of the covenants and obligations under the lease by your assignee.
In other words, if your assignee fails to perform the tenant’s obligations in the lease, (for example payment of rent) the landlord will be able to ask you to pay the outstanding sums.
Tread carefully and get advice
Therefore, before you enter into a lease or any other tenancy agreement, it is advisable that you speak to a solicitor who can advise you fully on the terms of the proposed lease.
This article is for general information purposes only. It does not constitute technical, financial, legal advice or any other type of professional advice and is no substitute for specific advice based on your individual circumstances. We do not accept responsibility or liability for any actions taken based on the information in this article. For more information, please click here.