What is an assignment of a lease?
This is the transfer of an existing lease by the current tenant of the lease to a new and incoming tenant with the Landlord’s consent.
The main parties involved in the assignment of a lease are:
Each party in the transaction will have their own solicitors, they will each pay their own legal costs however, it is usual in the assignment of a lease for the Assignee to also pay the Landlord’s legal costs.
1. The Assignee instruct their solicitors informing them that they are looking to take on the assignment of a lease
2. The Assignor’s solicitors will contact the landlord’s solicitors, informing them of the proposed assignment and will ask for the Landlord’s consent to the assignment of the lease.
3. The Landlord’s solicitors will usually request further information regarding the incoming Assignee e.g. trade or bank references as security that the Assignee is of sufficient financial standing to be able to take on the lease
4. Once the Landlord’s solicitor is satisfied with the references provided by the Assignee they will draft the following documents, that will become legally binding on completion of the assignment.
1. Licence to assign
2. Rent deposit deed
3. Authorised guarantee agreement*T
Licence to Assign is the legally binding document that transfers an existing lease by the current tenant to a new tenant with the consent of the landlord.
A Rent Deposit is a type of security taken by landlords to insure against the risk of a tenant not paying rent or breaching certain covenants in the lease. This is usually required by the Landlord from the incoming Assignee as a condition to the assignment of the lease. The terms that govern how the rent deposit is dealt with are set out in a Rent Deposit Deed.
An Authorised Guarantee Agreement is a legally binding document that is used where, the outgoing tenant guarantees the performance by the new tenant of the covenants in the lease.