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Ash
Ash, Solicitor
Category: Property Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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Can you please confirm if a guarantor under a commercial lease

Customer Question

Can you please confirm if a guarantor under a commercial lease on assignment is contractually obliged to guarantee the tenants obligations on an assignment of a lease.
The lease provides on assignment the Tenant and Guarantor enter into an authorised guarantee agreement.
Submitted: 3 years ago.
Category: Property Law
Expert:  Ash replied 3 years ago.

Alex Watts :

Hello my name is Alex and I will help you with this. Please note that I am a working Solicitor and may be on and offline as I have to attend Court and meet with clients, even at weekends. As such you may not get an instant response when you reply as this is not an ‘on demand’ live service, but rest assured I will be giving your question my immediate attention upon return. There is no need to wait here, you will get an email when I reply.

Alex Watts :

I assume you mean the new tenants once the assignment has taken place please?

JACUSTOMER-nd8d7flc- :

The guarantor is the guarantor under the present lease quaranteeing the tenants rent. The Tenant wishes to assign it is a condition of the lease the Tenant and his guarantor enters into an AGA. Can we force the Guarantor to enter into the AGA and if so is it now enforceable against the Guarantor.

Alex Watts :

No - he is only responsible for the current tenant.

Alex Watts :

Unless he consents you would need a new guarantor for thew new tenants

Alex Watts :

Can I clarify anything for you about this today please?

JACUSTOMER-nd8d7flc- :

The lease does provide on assignment that the Guarantor and Tenant will enter into an AGA The tenant guaranteeing the new tenant s covenants and the Guarantor acting as Guarantor for the existing tenant. It seems it was possible until recent case law
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Alex Watts :

Yes I would agree.

Alex Watts :

However the guarantor should have some knowledge

Alex Watts :

Can I clarify anything for you about this?

JACUSTOMER-nd8d7flc- :

The problem is the current tenant is virtually bankrupt therefore any Authorised Guarantee would be hopeless the Guarantor is in a good financial position . We do not really wish to lose our present guarantor. The lease does provide it is a condition of assignment the Guarantor and Tenant enters into a AGA it is also a condition a person of good financial standing acceptable to the landlord enters into a guarantee on assignment to guarantee the new tenants obligations. If we are unable to use the present guarantor and the Tenant is not creditworthy can we withhold consent to the assignment

Alex Watts :

Yes I understand but you can't bind him to something which was not reasonably foreseeable in the first place.

Alex Watts :

If this answers your question could I invite you leave feedback on my service which I hope has been excellent today, if you need more information or help then please click reply.

Please remember that I am always happy to help if you have future questions, even if I am in Court I can normally respond within a few hours. For future information, please start them with ‘For Alex W’.

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JACUSTOMER-nd8d7flc- :

Thank you for your response. Is it reasonable to withhold consent on the grounds we do not have a suitable guarantor of good financial standing acceptable to the Landlord.ing fn the nseir Are we abso ryour re for you kI

JACUSTOMER-nd8d7flc- :

Are we able to withhold consent on the grounds that we do not have a guarantor who is of sufficient financial standing acceptable to the landlord

Alex Watts :

Well I think you need to get another guarantor who is suitable. If you do then you should not refuse.

JACUSTOMER-nd8d7flc- :

Are we able to insist of the AGA by the current tenant to guarantee the new tenant and a separate new guarantor in addition to this.

Alex Watts :

Yes you can do this and if the tenant refuses then you can decline to give consent to assign.

JACUSTOMER-nd8d7flc- :

Presumably the guarantor will only guarantee the new tenants obligations and we cannot ask the guarantor to join in the AGA and guarantee the existing tenants obligations in the event the existing tenant fails to guarantee the new tenants obligations. ffation

JACUSTOMER-nd8d7flc- :

This is my last questions

Alex Watts : That is correct.
Alex Watts : Does this help?
Alex Watts :

If this answers your question could I invite you leave feedback on my service which I hope has been excellent today, if you need more information or help then please click reply.

Please remember that I am always happy to help if you have future questions, even if I am in Court I can normally respond within a few hours. For future information, please start them with ‘For Alex W’.

Please bookmark my profile if you wish for future help: http://www.justanswer.co.uk/law/expert-alexwatts/

JACUSTOMER-nd8d7flc- :

FAO Alex W

Alex Watts :

Please remember to leave feedback before you go today

JACUSTOMER-nd8d7flc- :

The lease was granted in 2008 the Tenant and Tenants Guarantor is required to enter into an AGA on assignment. In view of recent case law Fraser case is this not now enforceable against the Guarantor. It seems unjust when there is a covenant in the lease for the guarantor to honour this.

Alex Watts :

Yes I would agree, it may be unjust but you are stuck with the case law.

Alex Watts :

I am sorry if this is not the answer you want and certainly not the one I want to give you, but I have a duty to be honest

Alex Watts :

Can I clarify anything for you about this today please?

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