Assignment of a lease

Question 1

Old leases (granted on or before 31 December 1995)

Answer 1

Original tenant remained liable to the landlord to pay rent under privity of contract

Limited obligations passed to the new tenant under privity of estate – the new tenant would have to covenant directly with the landlord to observe all the tenant’s covenants in the lease

Question 2

New leases

Answer 2

When a new lease is assigned, the original tenant is released from liability, and all of the tenant covenants are passed to the new tenant

Question 3

AGA

Answer 3

Whereas an original tenant’s liability under an old lease extended for the whole of the lease term, an outgoing tenant only guarantees the next tenant under an AGA

If there is a subsequent assignment, then the outgoing tenant’s liability under the AGA ends

Question 4

Procedure

Answer 4

Undertaking of costs and license to assign

Tenant’s solicitor deduces title

Exchange (optional, contract may specify completion is conditional on landlord’s consent)

Pre-completion searches and landlord will prepare license to assign for landlord, tenant and assignee

Assignee drafts deed of assignment

Completion:
- The landlord’s solicitor, tenant’s solicitor and assignee’s solicitor agree over the telephone to complete and date the licence to assign
- The tenant’s solicitor and assignee’s solicitor agree over the telephone to complete and date the deed of assignment