Authorised guarantee agreements
Authorised guarantee agreements

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

  • Authorised guarantee agreements
  • What is an authorised guarantee agreement (AGA)?
  • The contents of an AGA
  • Can an outgoing tenant’s guarantor be forced to give an AGA in place of the outgoing tenant?
  • Unauthorised assignments and AGAs

What is an authorised guarantee agreement (AGA)?

Under an authorised guarantee agreement (AGA), an outgoing tenant guarantees some or all of the obligations of an incoming tenant under a lease. It was introduced by section 16 of the Landlord and Tenant (Covenants) Act 1995 (LT(C)A 1995) to appease landlords whose position had been substantially reduced by the abolition of original tenant liability. It only applies to ‘new’ leases (ie those granted on or after 1 January 1996). A lease granted on or after that date but pursuant to an agreement for lease, option or court order that was made before that date does not qualify as a ‘new’ lease.

An AGA may be a separate document or may be included in a licence to assign. In either case it must be in writing and signed by the guarantor if it is to be enforceable.

An AGA must:

  1. be an agreement where the tenant guarantees the performance by the assignee of the covenants from which the tenant has been released. Where a tenant assigns in breach of covenant or by operation of law, the tenant has not been released (see Unauthorised assignments and AGAs), and

  2. be entered into where the lease contains a covenant against assignment without the landlord’s consent and consent will only be given on the condition (which must be lawfully imposed) that the outgoing tenant

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