A Licence to Assign is an agreement between a Landlord and a Tenant where the Tenant wants to transfer their obligations under a Lease to another party, the Assignee.
Generally, most Commercial Property Leases allow the Tenant to assign the Lease with the Landlord's consent, which consent shall not be unreasonably withheld. If the Lease does not specifically mention the right to assign, it will be implied under section 19(1), Landlord and Tenant Act 1927 (LTA 1927), which imposes duties on a Landlord in relation to an application for consent to assign. If the Landlord unreasonably withholds consent, it will be liable in damages for breach of the duty.
The Landlord’s refusal to assign a Lease is justified where:
-
there are rent arrears or other material breaches of covenant by the Tenant at the date of the application;
-
the Assignee cannot show that it has the financial strength to pay the rent and other sums under the Lease, in which case the Landlord can request that the current Tenant guarantees the Assignee’s ability to meet all Tenant obligations under the lease;
-
where the Assignee intends to use the property for a purpose not allowed by the Lease.
Please note - If the original Lease absolutely prohibits assignment, then the Landlord can refuse consent without giving a reason.
This Licence to Assign - Commercial Lease shall be used where the Landlord consents to a request from their Tenant to assign, or transfer their obligations under the Lease to another commercial tenant, it contains the Landlord's consent to assign to the Assignee.
This Licence to Assign - Commercial Lease is drafted on the assumptions that:
-
the Landlord, the Tenant and the Assignee are companies incorporated and registered in England and Wales;
-
the original Lease is a headlease. If the original Lease is an underlease, the Superior Landlord must also be a party to the Licence and must give its consent;
-
there is no Tenant's Guarantor; and
-
a third party is not required to give a guarantee of the Assignee's obligations to the Landlord.
If the original Lease is registered at the Land Registry it most likely includes an obligation to register an assignment at the Land Registry and to notify the Landlord of completion of the registration. This Licence to Assign includes such obligation.
Please note - if there is a variation of the rent, the Licence may constitute a deed of variation in which case it may be liable for SDLT.
This Licence to Assign - Commercial Lease contains the following clauses:
-
Interpretation
-
Licence
-
Extent of Licence
-
Assignee’s Covenants
-
Costs
-
Right of Re-entry
-
Indemnity
-
Notices
-
Third Party Rights
This Licence to Assign - Commercial Lease is in Microsoft Word format, written in plain English easy to use and edit.
RELATED DOCUMENTS:
|
