The Court of Appeal clarified the law and upheld the validity of the partial guarantees. The decision confirms this: tenants and their guarantors are automatically exempt from liability to the lessor when a tenancy agreement is legally awarded to a third party. Landlords may, however, require outgoing tenants to enter into AGAs that guarantee the new tenant`s debts under a tenancy agreement. There is no provision for guarantors to do the same. It is less common to require a guarantor to directly guarantee the obligations of the new tenant, unless the transfer takes place between companies in the same group, so that confirmation of a non-place will rarely be refused. Nevertheless, some owners have followed this path in the past – in this case, such guarantees are not valid. Following the High Court`s decision in the Good Harvest case in 2010 that a guarantee of a transferee given by the outgoing tenant`s guarantor had given a guarantee for an assignee, heated debates took place over the validity of local debt guarantees. This was reviewed later that year in a case between owner K/S Victoria Street and House of Fraser (Store Management) Ltd. House of Fraser relied on the Good Harvest decision to argue that the agreement was not applicable. The High Court agreed and decided that the parent company`s guarantee was not valid as an outbound guarantee for the new tenant`s debts under the lease.
It also expressed doubts about the effectiveness of partial guarantees, i.e. outgoing surety guarantees on the debts of outgoing tenants under AGAs. The decision made it difficult for landlords and tenants to make it difficult for landlords and tenants to place orders with each other. If your lease was granted after 1996, there are more restrictions that the owner can sue in the event of a breach of the lease. In most cases, the lessor asks you for an authorized warranty contract if the lease is awarded, and this is a condition of the assignment, otherwise you will not get your landlord`s license. The advantage of the agreement is that the responsibility to guarantee the obligations of your successor according to DerArt, that your direct successor has received the lease, ends. As a general rule, the lessor`s lawyers provide a standard form of the agreement to transfer the lease. If the agent does not resign, you will remain liable until the lease expires.
In January 2006, K/S Victoria Street agreed to sell and lease a property in Wolverhampton to a House of Fraser Company. In accordance with the agreement, the management of the subsidiary should take over a lease guaranteed by the group`s holding company.