Can an existing lease be assigned?
Whether or not your lease can be assigned will be specified in a clause in the lease you signed with your landlord. In most cases, the assignment of a lease will be allowed with the landlord’s consent but expect certain restrictions on subletting and assignments to be present which help the landlord keep their control over the use of the premises.
The clause will usually also specify that the tenant will be responsible for finding a certain type of business to take over the lease (an “assignee”), as well as for paying the legal costs associated with the lease reassignment.
How does the assignment of an existing lease work?
There are a number of steps involved in assigning a lease. The first is to carefully read your contract to ensure that there is no absolute restriction on lease assignment in place. If there is not, the next step is to approach your landlord for consent to transfer your lease. At this point, the landlord will usually make you aware of any restrictions or stipulations they have regarding the assignment.You should then find an assignee. To keep things simple, we would recommend finding an assignee who is well suited to the premises (usually with a similar business to your own) and with a good financial history. Your landlord will do their due diligence, so if your proposed candidate does not have a trading history, good references, and at least three years of audited accounts, they may not be suitable.
Once your landlord has consented to the assignee taking over the lease, there are a number of legal documents that need to be completed, from the Licence to Assign to an Authorised Guarantee Agreement. Once the Licence to Assign is granted, you can assign the lease by way of a contractual agreement with the assignee. In practice the two documents are completed together. Finally, with all of the paperwork in order, you can move out of your premises and the new assignee can move in and take over responsibility for paying the rent.
How Our Expert Solicitors Can Help
Assigning a lease can be a complex process. From obtaining the consent of your landlord to finding a suitable assignee and completing the necessary paperwork, there are many steps and many potential pitfalls to consider. For this reason, we strongly recommend talking to an experienced Solicitor at the earliest possible opportunity. Our experienced and knowledgeable commercial property solicitors can help guide you through this process.
An experienced commercial property solicitor will have an initial consultation with you, free of charge, to discuss your situation in more detail. Once we understand your circumstances better, we can provide you with a clearer understanding of how we can help you. We will also provide you with a price quotation and a choice of funding methods at the outset.
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