I am looking to assign my lease. What do I need to do?

On behalf of Attwaters Jameson Hill posted in Corporate, Company and Commercial on Wednesday, August 24th, 2022

Assigning a lease means transferring the legal interest in the lease to a new tenant. This means that the new tenant will take on all your legal rights and responsibilities set out in the lease. Assigning your lease can be an option if your lease doesn’t contain a break clause and your landlord is not willing to negotiate a surrender.

Please note that assigning your lease is not the same as subletting. When you assign a lease, you are formally transferring your rights and obligations to a new tenant – you no longer have any responsibilities under the lease. When you sublet, you are giving another tenant (the secondary tenant) the right to temporarily occupy the premises. You (the primary tenant) will remain responsible for the tenancy, and must continue to pay rent and meet any conditions set out in the lease.

The process of assigning a lease

Due to the complex nature of commercial tenancies, it is highly advisable to instruct a solicitor for the lease assignment process.

Firstly, your solicitor will establish whether there are provisions for assignment (otherwise known as alienation) set out in your lease. If there are such provisions, there will usually be restrictions and conditions attached to the assignment process. Common restrictions include not being able to assign your lease if it is a short-term tenancy, or if your lease will be ending shortly.

Once you have established all the conditions and requirements for assignment, you will need to contact your landlord to request a license to assign. This will usually be dependent on you being up to date with all rental payments and other payments due under the lease, in addition your compliance with all covenants under the lease.

If this license is granted, your landlord will have formally agreed that you may assign the lease to an assignee. The license to assign will take the form of a deed. You will have to provide your landlord with details about your assignee (i.e., the tenant who will be taking over the lease), including:

ID
References
Accounts to prove that the assignee is of sufficient financial standing to take on the rent and tenant’s covenants in the lease.

Once your landlord is satisfied with your assignee’s ability to take on the lease, then the parties will nominate their solicitors. You will be responsible for your landlord’s legal fees and all costs associated with the license to assign.

If the assignee has a guarantor, then this information will have to be provided for them too. It is common for the lease to require you to become your assignee’s guarantor. You will usually be required to enter into an authorised guarantee agreement (either as a separate deed or as part of the license to assign).

Formalising your lease assignment

Once arrangements are completed with your landlord, you and your assignee will need to sign a deed of assignment. This will formally transfer the lease to your assignee and end your obligations under the lease. Often, the license to assign and deed of assignment are completed simultaneously.

If prior to taking on the lease you signed a rental deposit deed with your landlord, then they will return your rent deposit once the assignment is complete and enter into a new rent deposit deed with the assignee.

Consult our Commercial Property lawyers

If you are looking to assign your lease, our expert Commercial Property team can help. To see what we can do for you, please email adam.perin@attwaters.co.uk or call 0203 871 0049.