Agreements for lease with development obligations—assignment
Agreements for lease with development obligations—assignment

The following Property practice note provides comprehensive and up to date legal information covering:

  • Agreements for lease with development obligations—assignment
  • Assignment by the tenant
  • Assignment by the developer

Assignment by the tenant

The more important a particular tenant is to the viability of a particular development, the more likely that the landlord will insist the tenant should not be able to assign its interest under the agreement for lease. Key decisions by the lender who is funding the development costs and the investor who is buying the completed development (and also, if the developer doesn’t own the development site, by the seller who is committing its land to the development), will have been based to a material degree on the covenant strength and profile of those tenant(s) with whom the developer has secured a pre-let agreement. Any dilution of that covenant and profile will significantly prejudice the developer.

The developer therefore expects the same tenant to sign the agreement for lease and to take the lease when it is granted. Consequently, the agreement for lease is often personal to the tenant. The developer will also prohibit underletting, charging, parting with or otherwise dealing with the tenant's interest under the agreement for lease, although a right to charge (with the developer’s consent) will often be conceded if the tenant needs to secure funding for its fit-out works.

However, tax considerations or an intra-group reorganisation may dictate that the tenant is afforded the flexibility of having the lease taken by another group company, or by the tenant’s

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