Assignment of Leases

What does ‘assignment of existing leases’ mean?

‘Assignment of existing leases’ refers to the legal transfer of an existing tenant’s rights and obligations under a commercial lease to a new tenant, known as the assignee. The outgoing tenant, known as the ‘assignor’, ceases to occupy the property, and the assignee steps into their place, taking over responsibility for rent, repairs, service charge, and all other tenant covenants for the remainder of the term.

Most commercial leases restrict assignment. Some prohibit it altogether, while others permit it if certain conditions are met. For example, the assignor may need to obtain the landlord’s consent to the proposed assignment, usually by way of a formal licence to assign.

In many modern leases, the outgoing tenant may also be required to give additional security to the landlord, for example, by entering into an Authorised Guarantee Agreement (AGA), guaranteeing the incoming tenant’s performance.

At BWS Law, our commercial property solicitors advise clients on all aspects of assigning a lease. Just some of our areas of expertise include:

Reviewing the lease and advising on your options

Before you agree to any transfer, either as a potential assignor or assignee, it is vital to understand what the lease in question actually allows in relation to assignment.

To advise you on your position in this regard, our commercial property team will:

• Review the lease to confirm whether assignments are permitted. If they are, we will identify the conditions that must be met, including any requirement for landlord’s consent, AGAs, rent deposits, or guarantors.
• Explain in plain English your options for exiting or taking over a lease, whether by assignment, underletting, surrender, or other restructuring, and the benefits and risks associated with each route.
• Highlight any unusual or onerous covenants that might affect the premises’ marketability or your decision to proceed with the assignment, such as user restrictions, repair obligations, or alienation provisions.

Landlord’s consent and licences to assign

Most modern commercial leases provide that a tenant cannot assign without the landlord’s written consent, usually by way of a formal licence to assign.

Our commercial property team routinely advises clients on the form and implications of their proposed licence to assign. Our work typically involves:

• Preparing or reviewing the application for consent, ensuring that the landlord receives the information they need about the proposed assignee’s financial standing and business operations.
• Negotiating the terms of the licence to assign so that any conditions imposed by the landlord are fair, reasonable, and clearly documented, including any requirement for guarantees or additional security.
• Making sure that the consent is properly documented and executed as a deed to ensure enforceability.

Authorised Guarantee Agreements and security

Landlords regularly seek extra comfort when a lease is assigned, particularly where the incoming tenant is a new business with a limited trading history.

Often, landlords will require that the outgoing tenant enters into an Authorised Guarantee Agreement (AGA). Under an AGA, the tenant agrees to guarantee that the incoming tenant will comply with the terms of the lease, including paying rent and observing the tenant covenants. If the new tenant defaults, the landlord can pursue the former tenant under the AGA for arrears or other losses linked to the assignee’s breach. Other forms of security that are commonly used instead of or alongside an AGA include rent deposits and third-party guarantees.

Our commercial property solicitors regularly work with landlords and tenants in connection with all types of security for licences to assign, offering advice on key issues, such as:

• The scope of any Authorised Guarantee Agreement you are asked to sign as an outgoing tenant, including what covenants you are guaranteeing and how long your liability will continue for after assignment.
• Any appropriate limitations to the AGA, such as a clear release of the outgoing tenant when the lease is re-assigned.
• Alternative forms of security, such as rent deposits or third‑party guarantees, and whether these should be reasonably required instead of or in addition to the AGA.

Documentation, due diligence, and completion

Effective due diligence is essential in ensuring that the lease assignment is legally effective and that all parties understand their rights and obligations under it.

A crucial part of our commercial property solicitors’ role involves ensuring that our clients’ lease assignments and other pertinent documentation are properly drafted and accurately mirror their intentions. This involves:

• Drafting or reviewing the deed of assignment and all related documents, including the licence to assign, AGA, and rent deposit deed, to ensure that they are consistent with the lease and negotiated terms.
• Carrying out due diligence on incoming tenants, including checking their identity and corporate structure, and analysing their financial position.
• Confirming that the outgoing tenant has no existing arrears or existing breaches that need to be remedied before they assign the lease.

Why choose us?

Whether you are a landlord protecting your investment, a tenant looking to exit early, or a business taking over existing premises, our commercial property team is ideally placed to guide you through the assignment process.

We offer:

· National strength with a local focus

From our offices in Loughborough, we support businesses across the East Midlands and beyond with their commercial property needs, including complex lease assignments and portfolio work.

Clients benefit from the depth of experience and technical capability expected from larger practices, combined with the accessibility and continuity of a long‑established local firm.

· Client service built around you

At BWS Law, our clients’ needs are paramount. We understand that commercial property matters are often subject to tight timescales, operational pressures, and cash-flow considerations.  Assignments often need to be turned around quickly, particularly where they are linked to business sales, restructurings, or lease events such as rent reviews. That’s why we take the time to understand your priorities so that our advice is not only legally robust but also commercially realistic and aligned with your wider commercial strategy.

You can expect clear communication, regular updates, and prompt responses throughout your matter, with a single point of contact to keep the transaction moving and minimise disruption to your business.

· Efficient, cost‑conscious support

Our commercial property solicitors are committed to delivering an exceptional service at competitive rates. Our experience in advising clients on commercial lease assignments means that we can identify and resolve potential sticking points early, reducing the risk of delay, duplication, or unnecessary expense.

We provide transparent information relating to costs from the outset, so you know what to expect and can budget accordingly.

If you need advice on a commercial lease assignment, contact us today to find out more about how we can help.