an agreement in which the tenant guarantees the execution by the assignee of the agreements from which the tenant has been exempted. If a tenant withdraws in violation of the contract or by application of the law, the tenant has not been released (see illegal assignments and AGAs), which means that the outgoing tenant may be required to take an AGM to ensure the execution by the assignee of the tenant`s agreements in the tenancy agreement. According to the Court`s case law, it is established that the guarantor of an outgoing tenant can guarantee the performance of his obligations under the AGM as a sub-guarantee. Under an approved warranty agreement (AGM), an outgoing tenant guarantees some or all of the obligations of a tenant entering into a tenancy agreement. It was introduced by Section 16 of the Landlord and Tenant (Covenants) Act 1995 (LT (C)A) 1995) to appease landlords whose position had been significantly reduced by the removal of the original liability of tenants. It applies only to „new” leases (i.e. those awarded on January 1, 1996). A tenancy agreement granted on that date, but under a tenancy, option or court order agreement that was issued prior to that date, is not considered a „new” lease. An AGM is an agreement that requires an outgoing tenant to guarantee the performance by the new tenant or „agent” of the tenant contracts included in the tenancy agreement. The issue was how a surety could guarantee the obligations of an outgoing tenant in an approved warranty contract (AGM) without violating the Landlords and Tenants Act (Covenants) Act 1995.
The law did not change the subletting rules, but it did mean that the parties could enter into an agreement with any commercial lease agreement, usually expressly in the lease agreement, indicating the circumstances under which consent to the assignment may be refused or under conditions under which consent may be given. The Landlords and Tenants Act came into force on January 1, 1996. The law abolished the „no contract” – the relationship between the parties in a contract that allows them to sue each other, but prevents a third party from doing so – for all new commercial leases, whereas, in certain circumstances, an outgoing tenant may be obliged to guarantee his immediate assignee. If you have any questions about authorized warranty contracts, as Ringrose Law acts on your behalf for your commercial real estate transaction, please contact a member of the Boston Office commercial team of Ringrose Law on 01205 311511. If a tenant enters into a lease with a new tenant (delegate), the lessor can ask the tenant to enter into an AGM with the lessor as a precondition for the approval of the tenancy agreement. An AGM is a form of guarantee that the tenant (outgoing) gives to the lessor that if the assignee does not fulfill the obligations of the lease, such as the payment of rent, repair of the property, etc., the outgoing tenant will do so. In other words, the outgoing tenant becomes the guarantor of the agent. Your landlord can follow you based on the age of your lease and the appropriateness of an authorized warranty contract. A recent High Court decision in the Co-Operative Group Food Ltd/. A-A Shah Properties Ltd (2019) refers to a dispute in the approved guarantee agreement (AGM), in this case an agreement involving a guarantor of the outgoing tenant. 1.
Check the terms of the lease to determine if the lessor automatically has the right to ask you to enter an AGM. If the owner does not, you should check that the owner is acting reasonably by seizing an AGM.