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Thomas, Lawyer
Category: UK Property Law
Satisfied Customers: 7617
Experience:  BA (Hons), PgDip, Practising Solicitor
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We have a commercial lease and reassigned it with full agreement

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We have a commercial lease and reassigned it with full agreement with the landlords. The new tenants have not paid the rent and have disappeared. We received a letter for rent arrears and contacted the landlords about what to do next . We have just tried to re enter the premises to clean it up and have been informed by the landlords that they have changed the locks. Does this mean they have forfeited the lease?

Thanks for your patience.

You need to see if you executed an Authorised Guarantee Agreement as a condition imposed on the assignment by your landlord. A lease drafted to normal modern standards will have this condition and I would be surprised if the landlord did not make you execute it as a condition.

This means that you guarantee the performance (ie payment of rent) of the tenant convenants by the person you assign the lease to. So, if they stopped paying rent then the landlord would be able to sue you for the amount owing.

If the lease was not forfeited then you would be able to instruct a solicitor to take an “overriding lease” which effectively means that you take the lease back and become responsible for it for the remaining length of the term. You would of course at this point look to assign it to another tenant and mitigate your loss.

If the landlord has changed the locks then this probably means that they have forfeited the lease and it is no longer in existence. You need to confirm this with the landlord’s solicitors. If this has happened then you won’t be able to take an overrding lease and will instead have to either settle or litigate on the amount owing to the landlord.

However, the landlord is under a duty to mitigate their own loss (eg, by reletting) so you would only be liable for the rent ot the point at which the landlord could reasonably be expected to re-let the premise.

Sorry it could not be better news. You need to cheek if you signed an authorise guarantee agreement with the landlord, if you didn’t then they can’t sue you. If you did then they can provided that they themselves have not breached the agreement.

Some further investigation is required, but it does not look promising I am sorry to say

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Kind regards,

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