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Transferring a Commercial Lease

Transferring a Commercial Lease

By In Blog, Commercial Conveyancing On August 13, 2019


If you want out of a commercial lease but there is no break clause in sight, you could transfer your lease to a new tenant. This is called ‘assignment’.

Assigning a commercial lease

As a commercial tenant, there may come a time when you want to vacate your business premises. This could be due to expansion, relocation or the need to downsize. Whatever the reason, you need to examine the terms of your commercial lease. This will determine the options available to you.

If the lease is not due to expire, or there is not a break clause on the horizon, your last option may be to assign the lease. This is when you transfer the lease to another commercial tenant.

How to assign a commercial lease

If you want to assign a commercial lease, the first step is to find another tenant or ‘assignee’. You should choose a candidate suited to the premises, and who has a solid financial/professional history.

Next, you must get consent from your landlord. The lease may say that assignment is prohibited. However, the landlord may still allow it. In fact, the landlord should not refuse the request unless there are reasonable grounds for doing so.

For example, if you currently use the premises as an office and the new tenants want to open a betting shop, it would be reasonable for the landlord to refuse. Indeed, this change of use may not even be permitted.

Typically, a landlord will want the proposed tenant to provide three years of audited accounts, along with references from previous commercial landlords. If these cannot be provided, the landlord may request that the tenant has a guarantor.

If the landlord does consent to the assignee (or consents subject to conditions) there is various legal paperwork to complete. This includes an Authorised Guarantee Agreement and a Licence to Assign.

Once this is done, you can move out of the commercial property and the new tenant can move in. The new tenant then becomes responsible for paying the rent and meeting any other conditions.

Get expert legal advice

However, you may still have certain liabilities. As the outgoing tenant, you may be required to sign an Authorised Guarantee Agreement, whereby you guarantee the new tenant’s performance. It is important to understand what this means so you can mitigate any risks.

You also need to ensure that in transferring your lease, you are not breaking the terms of your contract or breaching any other covenants. Therefore, if you want to assign your commercial lease, legal advice is strongly recommended.

Commercial property solicitors Sunderland

Looking for legal advice regarding your commercial lease? If so, please call our Sunderland solicitors on 0191 567 7244 and we’ll be happy to help. 

If you would rather contact us online, email us on info@cooklaw.co.uk or complete a Free Online Enquiry and one of our team will be in touch with you shortly. 


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