Legal advice: Assigning your lease
Sometimes tenants want to call it a day and move on. If your lease still has several years to run, it may have a value in the open market, so you may want to assign it.
Your starting point is to check the provisions in your lease carefully. Often these appear under the heading 'alienation'.
Some leases forbid you from assigning to a third party under any circumstances. If this is the case then there is nothing you can do: if you want to leave early and be released from your ongoing obligations under the lease, you will need to negotiate a deal with your landlord.
Normally leases will state that if you do want to assign, you must first obtain the landlord's consent to the proposed assignment, but that the landlord must not withhold its consent unreasonably.
Before considering your application, the landlord's solicitors will ask you to give an undertaking that you will pay the landlord's costs for dealing with the application to assign. The courts have held that this is a reasonable request (so long as the sum being requested is itself reasonable). But the landlord cannot demand a premium.
The landlord's biggest concern will be whether the third party can pay the rent. The law states that the landlord is entitled to be satisfied on this point.
As a condition of granting you permission to assign, the landlord will often require you to enter into an an authorised guarantee agreement (AGA) whereby you will give the landlord a guarantee to pay the rent if the third party defaults.
What happens if you feel that the third party would make a perfectly good tenant but the landlord refuses you permission to assign to the third party? The landlord must give their reasons in writing as to why they believe the third party to be unacceptable, and then there will be a flurry of correspondence between the solicitors. You could always decide to go ahead and assign the lease anyway to the third party, even though your landlord is refusing you consent.
However, few third parties would agree to go through with the transaction on this basis - and the landlord could take steps to forfeit your lease and/or claim an injunction and/or damages. Few tenants take this risk.
Breaches
Your lease might state that you are entitled to assign so long as there are no outstanding breaches of the lease.
Often landlords will make it a condition of an assignment that the pub is put into a proper state of repair. The landlord may require you to do this before you leave, or else may require the third party to do the works within a specified period.
The same point applies if you are in arrears with your rent. Again, the landlord may say that they will not allow you to assign until you have agreed how and when any arrears are to be cleared.
Sometimes your landlord may say that they will agree to an assignment if at the same time you agree to the lease being varied. For example, if the landlord does not currently have the right to install monitoring equipment in the cellar, they may seek to vary the lease to allow for this. Strictly the landlord may not be allowed to impose a variation on you, but this is a point for negotiation.
Assuming that you do obtain permission to assign, do remember that you are not off the hook. If the third party then falls behind on their rent, your landlord will be entitled to pursue you for those arrears, under the terms of the AGA you have provided. If this happens to you, run the matter past your own solicitors for advice on your legal position.
