Licence to Assign Template Guidance Notes
A licence to assign is often required by a landlord under a lease where the tenant wants to transfer its lease to another party to take over the same. The transfer of a lease in this way is known as an assignment. The template which has been produced is based on the assumption that the lease to which the assignment applies, is commercial.
Note that this document excludes an Authorised Guarantee Agreement (“AGA”) and guarantee. If an AGA is required by the landlord and the tenant has a guarantor, such provisions in respect of the same will often be incorporated into the licence.
If another condition of the landlord for assignment is for the assignee to enter into a rent deposit deed this would also need to be reflected in the licence.
We would advise that the licence is cross checked against the lease and amended accordingly in order to ensure that the correct conditions and obligations are reflected in the same.
Please further note the following in respect of the template:
- Relevant text will need to be inserted/replaced within the square brackets where indicated throughout the document.
- Cover page – The outgoing or current tenant is known as the assignor and the new tenant to which the lease is being transferred is known as the assignee. If there are guarantors for the assignor and assignee, they would normally be added as parties to the agreement.
- Top of page 1 – complete the details accordingly and delete the relevant text where appropriate, the text will need to be revised to reflect whether the party is a company or an individual.
- Page 1 – Background – This confirms that the licence is in addition to the lease and sets out the brief context as to why the licence is required.
- Clause 1 – this sets out the terminology used and interpretation under the licence.
- Clause 1.4 – delete ‘England’ or ‘Wales’ as appropriate in respect of the definition of ‘working day’.
- Clause 2 – this clause is where the formal consent is provided by the landlord for the assignment.
- Clause 2.2 – It is common practice for the consent to be limited in time, 3 months is typical.
- Clause 3 – This clause sets out the conditions which must be complied with on the part of the assignee in respect of the grant of the assignment.
- Clause 3.3 – This clause provides that the assignee will need to liaise with the landlord following completion of the assignment to give them notification in respect of the same (these usually mirror the notification requirements for assignments in the related lease, therefore you may delete this clause if no such reference is made. The time frame at the start of the clause and the figure referred at clause 3.3 (c) would also normally be found in the lease).
- Clause 4 – It is common practice for leases to require that a tenant pays the landlord’s costs when applying for a form of landlord’s consent and such a requirement is reflected in the licence. Note that this section should be cross checked against the lease and amended accordingly to reflect the same.
- Clause 5 – this states that any right of re-entry to the property, which the landlord would have under the lease, extends to being exercisable if a condition under the licence is breached.
- Clause 6 – If there are any breaches of the assignor’s and / or assignee’s obligations under the licence each relevant party will need to reimburse the Landlord for any liabilities/reasonable costs they incur in respect of the same.
- Clause 7 – This clause prescribes the way in which notices are to be served by each party.
- Clause 10 – This clause will not be required if the assignment does not need to be registered. The assignment will need to be registered at the Land Registry if the assignment is of a registered lease or it is an assignment of a lease that is not registered but whose term has more than 7 years left to run.
- Clauses 10 (a) and (c) – A typical time frame for applying to register the assignment and sending the Landlord official copies is one month.
- Signature page – The signature clauses are drafted on the assumption that the parties entering the agreement are companies, if they are individuals then the words ‘acting by’, ‘director’ and ‘a director’ should be removed accordingly.