If a business finds that it needs to downsize during the term of a lease on their premises, then it may be possible to assign the lease or sub-let the property to another party. The terms of the lease will need careful checking to make sure that it does not contain restrictions preventing these actions.
Whether you are a tenant or a Landlord of commercial premises, you are likely to need to address the granting of a Landlord’s Licence should the tenant wish to assign or sub-let the Lease. Equally, the tenant may require some alterations to the property which would involve the grant of a Landlords Licence for Alterations or other such variations to a Lease.
Where a Lease is assigned (sold) by the current tenant, this often involves the Landlord looking for additional security in respect of a new tenant with whom the Landlord might not be fully familiar. This can involve the granting of a form of guarantee, either by the current tenant (an Authorised Guarantee Agreement or AGA), or by a guarantor of the purchaser, or may equally involve the new tenant putting down a deposit under a Rent Deposit Bond as added security for the payment of rent and performance of other obligations under the Lease.
If a Landlord is to give a Licence to allow a property to be sub-let he will require the proposed Underlease to be carefully considered as it may well contain provisions regarding the incoming sub-tenant with which he, the Superior Landlord, must comply.
If you need help with a landlords' licence, please contact our commercial property lawyers.