Q&As

Where a tenant has assigned a lease and the outgoing tenant gives an authorised guarantee agreement (AGA), must the outgoing tenant as guarantor be a party to any rent review memorandum which may be entered into in order for any default on the rent to be enforceable as against them?

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Published on LexisPSL on 15/07/2019

The following Property Q&A provides comprehensive and up to date legal information covering:

  • Where a tenant has assigned a lease and the outgoing tenant gives an authorised guarantee agreement (AGA), must the outgoing tenant as guarantor be a party to any rent review memorandum which may be entered into in order for any default on the rent to be enforceable as against them?
  • AGA
  • Guarantors and rent review memoranda

Where a tenant has assigned a lease and the outgoing tenant gives an authorised guarantee agreement (AGA), must the outgoing tenant as guarantor be a party to any rent review memorandum which may be entered into in order for any default on the rent to be enforceable as against them?

AGA

An authorised guarantee agreement (AGA) is a form of guarantee given by an outgoing tenant who guarantees some or all of the obligations of the incoming assignee under a lease (section 16 of the Landlord and Tenant (Covenants) Act 1995 (LT(C)A 1995)).

The precise terms of the AGA will be a matter for negotiation and are subject to certain restrictions imposed by LT(C)A 1995. It would be usual for the AGA to include a guarantee that the assignee will perform most, if not all, of the tenant covenants under the lease, including any obligation to pay the rent. Where the lease includes a rent review, the tenant covenants in the lease will include an obligation to pay the rent falling due under the lease as reviewed from time. This is therefore carried into the terms of the guarantee in the AGA.

An AGA may also require the tenant to become liable under the AGA as a sole or principal debtor. This means that its liability is separate from and in addition to the assignee’s liability under the

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