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ARTICLE · 07 APRIL 2015

The Latest Thinking On Lease Guarantees

Reed Smith (Worldwide)
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The dust has now settled on the recent cases involving discussion on the continuing AGA, GAGA situation and its inter play with section 25 of the Landlord and Tenant (Covenants) Act 1995.

United KingdomReal Estate and Construction
Stuart Wright
Stuart Wright
Siobhan Hayes
Siobhan Hayes
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The dust has now settled on the recent cases involving discussion on the continuing AGA, GAGA situation and its inter play with section 25 of the Landlord and Tenant (Covenants) Act 1995.

The second case has given us just a little bit more certainty about how lease guarantees on an assignment can be made to work whilst not introducing anything radically new. (See our previous post on the first case here).

Our advice to investor landlords is –

  1. As previously the best understanding we have from the cases is that a guarantor may guarantee the obligations of the outgoing tenant on an assignment in the AGA (often now called a GAGA or a sub guarantee).
  2. Repeat guarantees are not valid so a current guarantor may not validly stand as guarantor for the obligations of the incoming assignee.

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