Real Estate Tip of the Week: No Go for Guarantor Assignment - DAC Beachcroft

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Real Estate Tip of the Week: No Go for Guarantor Assignment

Published On: 25 April 2016

A recent Court decision (EMI Group Limited v O & H Q1 Limited) has confirmed for a 'new' tenancy (which is, subject to a few exceptions, one granted on or after 1 January 1996) that any attempt by the tenant to assign to its own guarantor will be void even if the landlord, tenant and guarantor all agreed to the assignment taking effect.

This decision provides an answer to an outstanding question that arose in the K/S Victoria Street case, and arises out of the anti-avoidance provisions in the Landlord and Tenant Act 1995.

So if your tenant under a 'new' tenancy applies to assign its lease then you should check the proposed assignee is not the tenant's guarantor to prevent any assignment being void.

Read this article in full.

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