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ARTICLE · 30 JULY 2014

Is The Guarantee You Have Valid?

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An Authorised Guarantee Agreement (or AGA) is a guarantee by a tenant of its assignee’s performance of the tenant obligations in the lease.

United KingdomReal Estate and Construction
Priya Sharma
Priya Sharma
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An Authorised Guarantee Agreement (or AGA) is a guarantee by a tenant of its assignee’s performance of the tenant obligations in the lease.

A guarantor’s guarantee of the assignor’s AGA obligations is valid

More recently it has been confirmed that the guarantor of an outgoing tenant may validly guarantee that tenant's performance of its AGA obligations.

A guarantor’s guarantee of the assignee’s performance will be void

By contrast, an AGA entered into by a tenant’s guarantor to guarantee the obligations of the assignee will be void. Therefore, any obligations in leases that require a tenant’s guarantor to enter into an AGA guaranteeing the assignee as a pre-condition to granting landlord’s consent to an assignment is unenforceable. In such situations, landlords should consider alternative security.

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