A Tenant’s Perspective For Assigning A Commercial Lease

Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInEmail this to someone

How easy is it to assign your commercial lease? Before signing up to a lease it is important to fully consider your future business requirements.

When entering into a commercial lease it is important to consider whether your interest can be assigned to a third party. You may be locked into your lease term for a considerable period during which time your business needs along with the economic climate will inevitably change. For example, you may outgrow your premises or you may be struggling to keep up with lease rents and overheads. In both circumstances you may want to assign your interest.

Most leases allow for assignment of the whole of a premises with the Landlord’s reasonable consent, not to be withheld or delayed. Landlords will want to ensure that any new prospective tenant is financially secure and satisfactory and may request that accounts, references and credit checks, along with personal guarantees for limited companies and/or deposits are provided.

In addition tenants should carefully consider any further restrictions that the Landlord may impose in allowing an assignment.   An Authorised Guarantee Agreement (“AGA”) may be required in which the outgoing tenant guarantees the performance of the tenant covenants by the incoming tenant. Assignment may also be prohibited where there are current tenant breaches or where the proposed tenant is a group company.  This list is not exhaustive and great care should be taken in ensuring that you are aware of all the complex practicalities.

In light of the above it is therefore crucial that tenants negotiate assignment terms prior to entering into a lease. This will provide tenants with future flexibility and also a better understanding of future prospects.

The Commercial Property Team at Forbes Solicitors offer a fixed fee lease report which includes –

  • An initial consultation with one of our specialist Commercial Property Lawyers who will be dedicated to your file to find out what you want to get out of your lease and to discuss the terms you have agreed with the Landlord
  • A full review of the draft lease to ensure all the agreed heads of terms have been incorporated into the lease
  • A full report on the key terms of the lease without any legal jargon with an explanation of how those provisions will affect your occupation of the premises during the term. We will detail any unusual or onerous provisions and explain the implications for you as a tenant;
  • The provision of a full report within 5 working days of receipt of the draft lease.

For further information contact our Property Solicitors on 0800 689 0831 or make an enquiry here

Laura Bradley

About Laura Bradley

Laura Bradley is a Solicitor in the Commercial Property department at Forbes Solicitors. Within her blogs Laura deals with all aspects of commercial property including leases (from both landlord and tenant perspective), licences, acquisitions and disposals along with recent updates within the property sector.
This entry was posted in Commercial Property and tagged , , , , , , .

Leave a Reply

Your email address will not be published. Required fields are marked *